Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

MESSAGE FROM THE QUEEN

QUEEN'S SPEECH (ANSWER TO ADDRESS)

The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address as follows:
I have received with great satisfaction the loyal and dutiful expression of your thanks for the. Speech with which I opened the present Session of Parliament.

NEW WRIT

For the county constituency of Penrith and the Border, in the room of the right hon. William Stephen Ian Whitelaw, CH, MC, called up to the House of Peers.—[Mr. Wakeham]

PRIVATE BUSINESS

LLOYDS BOWMAKER BILL [Lords] (By Order)

STANDARD CHARTERED MERCHANT BANK BILL (By Order)

Orders for Second Reading read.

To be read a Second time tomorrow.

Oral Answers to Questions — ENVIRONMENT

Council Houses

Mr. Winnick: asked the Secretary of State for the Environment if he will make a statement on the Government's policy on the building and improvement of council dwellings.

The Minister for Housing and Construction (Mr. Ian Gow): Local authorities are free to determine their own priorities for investment, including on newbuild and improvements to council dwellings, within the total resources available to them.
Public housing starts in 1982 were substantially higher than in 1981. In the first five months of this year there was a significant increase over the same period in 1982. The number of dwellings improved by local authorities last year—62,600—was substantially above the number in 1981—52,400.

Mr. Winnick: Is the Minister aware that as a result of cuts in public expenditure and the Government's

dogmatism an increasing number of people are desperately in need of council accommodation? Is he further aware that such people are not in a position to take on a mortgage? Are Ministers proud of the fact that, despite all the figures and the boasts, council house building remains at the level that it was in the 1920s? Is that not a scandal and a disgrace, because it causes intense misery for hundreds of thousands of people?

Mr. Gow: There has been a considerable increase in housing starts in recent years. For example, in 1982 the number of starts was 35,000 above that in 1981. In the first five months of this year starts totalled 84,200, compared with 71,900 in the first five months of last year.

Mr. Heddle: I congratulate my hon. Friend on his first appearance at the Dispatch Box at Question Time. Does he agree that the Labour party, instead of weeping crocodile tears over those who want the right to rent, should drop its dogmatic objection to shorthold and thus enable such people to rent property, not only in the public sector, but in the private sector too?

Mr. Gow: I am grateful to my hon. Friend for his congratulations. I agree entirely with his second point. Some of the remarks that are made by Labour Members diminish the prospect of rented accommodation becoming available in the private sector—something for which the Labour party claims to be strongly in favour.

Mr. Meadowcroft: Will the Minister turn his attention to the second half of the question, about improvements? There are great problems in industrialised building, particularly Reema houses and flats, the occupants of which cannot obtain mortgages, nor have them demolished by the local authority. Will the hon. Gentleman publish the report that his Department now has on that?

Mr. Gow: I shall consider what the hon. Gentleman has said and make a statement as soon as I am able to do so.

Mr. Nelson: Does my hon. Friend agree that one of the most significant proposals put forward to improve the existing stock of council dwellings is the right-to-repair provision in the Housing and Building Control Bill, which has just been introduced, and that far from castigating that provision, as the Opposition appear to do, they should applaud it?

Mr. Gow: My hon. Friend is right. We hope that the right-to-repair provision in the Bill, which received its Second Reading yesterday by a substantial majority of more than 200, will, when it reaches the statute book, significantly improve the opportunity for council properties to be repaired in the way that my hon. Friend suggests.

Mr. John Evans: Does the Minister believe that local authorities should be encouraged to spend some of the money that they receive from the sale of council houses to repair and improve existing council stock?

Mr. Gow: Yes. It is open to local authorities to spend their receipts from the sale of council houses in the way that they determine. I hope that they will spend their money, because, as the House knows, there was a significant underspend last year of approximately £800 million.

Mr. Spence: Will my hon. Friend ensure that the spirit as well as the letter of the Housing Act 1980 are enforced


for the improvement and new building of houses and dwellings by local councils, by means of private labour organisations, by competitive tendering and by making them responsible for the figures that they produce?

Mr. Gow: The Department of the Environment has responsibility for ensuring that the direct labour organisations are managed in accordance with the Act and it is our duty to monitor progress by local authorities. We shall do our utmost to ensure that both the letter and the spirit of the Act are observed.

Rating

Sir Patrick Wall: asked the Secretary of State for the Environment if he will now consider replacing the present rating system by a poll tax.

The Secretary of State for the Environment (Mr. Patrick Jenkin): No, Sir. We have concluded that the disadvantages would far outweigh the advantages.

Sir Patrick Wall: I appreciate that the Government will act to deter excessive rate increases, but does my right hon. Friend agree that that will do nothing to remove the basic unfairness of the present system whereby the occupants of one house may have three incomes, while another house, with a similar rateable value, may be occupied by a pensioner? What will my right hon. Friend do about that unfairness?

Mr. Jenkin: Over the past 18 months the Government have probably given more thought to that issue of local government finance than to any other since we took office in 1979. We have tried to find a way to meet the problem, about which I know many people feel keenly. For the moment there does not seem to be a way which would be acceptable and fair and not give rise to even greater anomalies than those to which my hon. Friend has drawn attention.

Mr. Allan Roberts: Will the Minister say whether, like his predecessors, he is the Minister for Merseyside? If he is, is he aware that the people of Merseyside think that he has already destroyed the rating system there? One of his first acts has been to take £13 million away from Merseyside county council — money which could be used to provide jobs and services there.

Mr. Jenkin: The phrase "Minister for Merseyside" was concocted by the press. It was used neither by my right hon. Friend the Secretary of State for Defence nor by my right hon. Friend the Secretary of State for Transport. However, I can confirm that I inherited from my right hon. Friends the responsibility for carrying forward the work of the task force and other notable initiatives which they started on Merseyside.

Mr. Neale: Will my right hon. Friend consider the way in which the rating system can militate against commercial premises? It requires them to pay water rates despite the fact that they do not have any water serving their premises, which places a great onus on many small businesses in the west country.

Mr. Jenkin: I am aware of the problem to which my hon. Friend has drawn my attention. I cannot offer an immediate solution, but the problem is one to which I shall give attention.

Mr. Kaufman: How can the Secretary of State justify imposing a fine of £280 million on local authorities for

alleged overspending in the financial year 1983–84 when only three months of that year have elapsed, when the year will not be over until the end of next March and when the ascertained expenditure will not be known for a year after that? By what standards of justice does the right hon. Gentleman invent a crime and then punish local authorities which have not even committed it?

Mr. Jenkin: I am grateful to the right hon. Gentleman for giving me an opportunity to put the absurd remarks that he has made to the press and on radio and television into context. He has talked about this as though it were the death knell of local authorities. The total amount of rate support grant for the current year is £11,782 million, compared with the amount of holdback which the supplementary report which was published yesterday gave as £280 million, against an overspend in excess of their budgeted expenditure over target on current spending of £771 million. There is nothing in that statement which all local authorities would not have known perfectly well and could not have worked out for themselves last January. They knew to four decimal points of a penny precisely how it would be calculated and they decided to budget in excess of target.

Mr. Speaker: Order. It is important that hon. Members make their supplementary questions relevant to the main question.

Mr. Kaufman: As the Secretary of State regards my statements as absurd, does he also regard as absurd the statement of Mr. Ian McCallum, the Conservative chairman of the Conservative-controlled Association of District Councils, that the Government's policy is unnecessary, unreasonable, unjust and has grave and far-reaching constitutional repercussions?

Mr. Speaker: Order. That question had nothing to do with the main question.

Derelict Land

Mr. Dormand: asked the Secretary of State for the Environment if he is satisfied with the clearance of derelict land in the northern region; and if he will make a statement.

The Under-Secretary of State for the Environment (Mr. Neil Macfarlane): I am satisfied that substantial and worthwhile progress has been made, though much remains to be done. The region's allocation for derelict land grant this year is £10 million, 54 per cent. up on last year's initial provision.

Mr. Dormand: Is the Minister aware that the region's share of the national allocation of the derelict land grant is only about half of what it was in the late 1970s? Is he further aware that that fall has taken place against a background of an increasing amount of derelict land in the region, some of which—not all—has been caused by the Government's policies? In view of that, will he urgently re-examine the figure of £ 10 million which he has just mentioned, which is completely inadequate for the needs of the north?

Mr. Macfarlane: We shall always examine any grant-aid that we give, particularly in this important area. When the hon. Gentleman says that the northern region has not done well in recent years—that is the implication of his observations— it is fair to say that it was one of the


pioneering regions many years ago, and in the early years it received a great deal of money. Therefore, there is a good case for other regions to come up alongside and make bids. The hon. Gentleman says that there has not been much response from the Government, but the fact is that 18 schemes were submitted in the current year, of which nine were accepted. I should have thought that that was ample confirmation that we were devoted to the concept of urban renewal.

Mr. Speaker: Mr. John Ward, to ask Question 4.

Dr. David Clark: rose—

Mr. Speaker: I apologise. I should have called an Opposition Front Bench spokesman.

Dr. Hampson: On a point of order, Mr. Speaker. I was the only member on the Conservative Benches seeking to catch your eye.

Mr. Speaker: Order. I should have called an Opposition Front Bench spokesman.

Dr. Clark: Does the Minister not appreciate that his inflexibility in administering derelict land grant causes great difficulties in regions such as the northern region, which has a growing number of problems in the form of derelict shipyards, steelworks and industrial sites? Could not the Minister make the system more flexible? Will he introduce a two-year or three-year rolling programme?

Mr. Macfarlane: It is inaccurate to say that the Government are inflexible in administering the derelict land grant. The Government are completely flexible. I am well aware that in recent days the North of England County Councils Association has made several observations. We shall consider everything that it has to say to my Department.

Dr. Hampson: Is my hon. Friend aware of the resentment, both in the northern region and in Yorkshire-Humberside, at the fact that there is only one regional director to carry out the Government's regional policies, and that he spends as much time commuting on trains between Leeds, Newcastle and London as he does at his desk? Will his right hon. Friend appoint separate regional directors for Leeds and Newcastle?

Mr. Macfarlane: I can give no assurance to my hon. Friend at this moment, but I take note of what he said.

Mr. Dormand: On a point of order, Mr. Speaker. The hon. Member for Leeds, North-West (Dr. Hampson) called into question a ruling which you gave a few moments ago. The hon. Gentleman knows that this question is about the northern region. He neither speaks for nor represents a constituency in the northern region.

Mr. Speaker: We got ourselves into a slight twist. It was my fault.

Rates

Mr. Ward: asked the Secretary of State for the Environment what are the average rate increases in 1983–84 for each class of authority.

The Under-Secretary of State for the Environment (Mr. William Waldegrave): With permission, I will arrange for the figures to be circulated in the Official Report.

Mr. Ward: I thank my hon. Friend for that somewhat short reply. I trust that when he publishes the figures they will prove conclusively the need to get rid of the metropolitan authorities so that we can reduce the rates charged by local authorities.

Mr. Waldegrave: There are nine categories of authority in the answer, and the House usually is not happy when long lists are read out.
My hon. Friend is right. The average rate increase of the metropolitan counties is well above that for the country as a whole. My hon. Friend will find various other factors that will interest him. Analysis will show that if one has the misfortune to be in a Labour county one is likely to have an above average rate: if one has the misfortune to be in a Labour district one is likely to have an above average rate; and if one has the misfortune to be in both one will pay well above the average rate.

Mr. Skinner: Does the Minister accept that one reason for the increase in rates, apart from the reduction in rate support grant, is the fact that back in the early 1970s a Tory Government promised to get rid of rates altogether and then decided to reorganise local government, which cost a fortune? Does he further accept that before the general election they promised to introduce a poll tax and to get rid of rates once again? They have promised to reorganise local government, and that will cost a fortune. Can we really believe anything the Tories say?

Mr. Waldegrave: The figures that we have published show that if the 18 top rating authorities in the country had rated on target there would be no average increase in rates in England.

Sir Kenneth Lewis: Whey my hon. Friend is considering these figures, will he resist the temptation to prevent local authorities from increasing their rates—notwithstanding the fact that we want them to keep them down— because the electorate will see to that in the domestic area? Will he, however, put a cap on the increase that these councils can impose on business rates, because businesses have no vote?

Mr. Waldegrave: Any action that the Government take will bite against very few authorities. As I mentioned, 18 authorities — all Labour authorities — could have brought us right back to target. The great majority of authorities—up to 80 per cent. of them—both Labour and Conservative, are rating within 2 per cent. of target. Our proposals need frighten none of those responsible authorities.

Mr. Hardy: Will the Minister confirm that the share of local expenditure met by central funds is lower than it has been in living memory? Will he further confirm that there is growing suspicion about the inequitability of the distribution of central support and that it is strongly suspected in the metropolitan areas that southern areas and the shire counties have done extremely well? Does he agree that this suggests that, if the Government are really concerned with the whole of England and Wales, they should reconsider the matter carefully?

Mr. Waldegrave: My right hon. Friend is always willing to receive representations about the exact workings of the GRE formula, but the representatives of some of those southern authorities will not endorse what the hon. Gentleman says.

Following are the figures:




The average local rate or precept increases between 1982–83 and 1983–84 for each class of authority in England were



Per cent.


Shire counties
5·9


Shire districts
0·9


Metropolitan counties
7·4


Metropolitan districts


3·5


Inner London boroughs (including the City)
15·7


Outer London boroughs
6·4


GLC
14·7


ILEA
8·5


England (general rates)
6·4

Lead-free Petrol

Dr. Mawhinney: asked the Secretary of State for the Environment when he expects lead-free petrol to be available in the United Kingdom.

Mr. Haselhurst: asked the Secretary of State for the Environment if he will make a statement on progress towards securing agreement among European Community countries to the removal of lead from petrol.

Mr. Waldegrave: The Royal Commission on environmental pollution thinks that it should be possible for unleaded petrol to be introduced for new cars throughout the European Community by 1990. This seems reasonable, though we shall try to improve on it if possible. A promising start was made at the Environment Council on 16 June.

Dr. Mawhinney: I thank my hon. Friend for that reply. What steps does he plan to take to ensure that this welcome decision is implemented as quickly as possible, preferably before 1990?

Mr. Waldegrave: Discussions have begun and are continuing between officials of my Department and the other relevant Departments — Transport, Energy, Industry, and others — and the various interests concerned, to lay out a programme. I take my hon. Friend's point. If it is possible to do better, the British Government will be anxious to do so.

Mr. Haselhurst: Despite the understandable urgency over reducing the health hazard in our own country, does my hon. Friend accept that it is still an enormous prize to ensure that we are acting in concert throughout Europe?

Mr. Waldegrave: My hon. Friend makes a fair point. The real prize is to achieve a European-wide ban. That is what we have been pressing for in the forum of the European Community. Five of our fellow members have now signed the British document, which put forward the strongest line, and others are considering their positions. Unilateral action is far less effective than European-wide action.

Mr. Pavitt: Is the hon. Gentleman aware that the most important interest group to consult is the parents of children living near arterial roads? Will he therefore consult the London borough of Brent, which has monitored the effect of lead on those living near the north circular road and found that enormous brain damage may occur unless he acts more urgently? Will he therefore act as speedily as the United States and seven European countries have done and propose an earlier date than 1990, by which time those children will have suffered brain damage?

Mr. Waldegrave: I am aware of the monitoring that has been carried out in Brent and other places. The British Government have taken the lead in Europe on this issue. We are not strengthened by overstating the scientific case. We know that lead is a poison—that is why we want to remove it—but we must not exaggerate the immediate dangers. On the other hand, there is increasing scientific evidence—some is published in this week's edition of New Scientist — based on work done by the Medical Research Council at Cambridge, which shows why the policy is fundamentally right.

Mr. Neil Hamilton: As the jobs of 250 people in my constituency and the jobs of 2,500 people in other hon. Members' constituencies will depend on the speed with which the major lead additive producers— Associated Octel—will be able to diversify into other areas, will my right hon. Friend the Secretary of State ensure that in his discussions and deliberations on the timetable for the introduction of lead-free petrol there will be included representatives of that company in addition to representatives of the oil and motor industries?

Mr. Waldegrave: Representatives of that company have asked to see me and I shall be meeting them.

Mr. Denis Howell: As we do not know what the dangers are of absorbing lead into the human body—except that there is nothing to be said for it — why should we not exaggerate the dangers? Does the Minister agree that the date of 1990 for the introduction of lead-free petrol is unacceptable—or should be—to the whole of the country? As almost all members of the EC support the policy, as do all political parties in Britain, will he renegotiate immediately with the industry environmental agencies and consult opinion on both sides of the House with a view to introducing lead-free petrol at the earliest possible moment, and well before 1990?

Mr. Waldegrave: I am not sure that the Government have to put up with lectures from Labour Members on this subject. The Labour party had some years of opportunity when in Government to take action on this problem but it took none. The right hon. Gentleman has ruined his case by saying that we should encourage the putting about of exaggerated statements. Whatever the strength of the case, it is much better to tell the truth.

Home Improvement and Repair Grants

Mr. Hicks: asked the Secretary of State for the Environment if he is satisfied with the take-up of home improvement and repair grants at the enhanced rate of 90 per cent.; and if he will make a statement.

Sir George Young: Yes, Sir. The response to the Government's initiative on both repairs and intermediate grants to which the 90 per cent. rate applies has been most encouraging. Provisional figures for England show a sixfold increase in the repairs grants paid in 1982 compared with 1981. The number of intermediate grants paid in 1982 was provisionally more than one third greater than in 1981.

Mr. Hicks: Is my hon. Friend aware that the very success of the scheme is creating problems involving a backlog of applications which are unlikely to be processed, let alone the necessary building work undertaken, before the terminal date of April 1984? Will


he assure the House that the terminal date will be extended, or that payment will be made in the next financial year for applications made during the current financial year?

Sir George Young: Applicants' interests will be safeguarded as long as they apply before 31 March 1984. The application does not have to be processed by that date for the applicant to be eligible. I hope that my hon. Friend's local authority, Caradon, will consider its priorities across the board to ascertain whether there is any way of redeploying resources or streamlining the process to make faster progress with this policy, which is a tribute to our success in renovating the housing stock.

Mr. Fisher: Is the Minister aware that more than 600,000 households lack or share baths and that over 700,000 lack or share inside toilets? Does he accept that he has a responsibility for the unacceptable living conditions that these people have to tolerate?

Sir George Young: That is why the Government introduced the initiative with which I was dealing. Expenditure in 1982–83 is expected to be about £400 million, which will be twice the expenditure in 1981–82.

Mr. Rossi: Is my right hon. Friend aware that the London borough of Haringey is refusing to accept applications from wards which returned Conservative councillors, which, prima facie, is discrimination of a rather nasty sort? Will he make an inquiry into the practice?

Sir George Young: If that policy is being pursued in Haringey, it is inexcusable. Our policies are aimed at renovating housing stock wherever the stock happens to be. I hope that no one in the House will defend such discrimination against people for exercising their democratic rights in an election.

Mr. Cartwright: Does the Minister accept that one of the problems about the take-up of grants is the time that it takes some local authorities to process the applications, especially when more than one council department is involved? What steps is he taking to speed up the process?

Sir George Young: It is the responsibility of local authorities to process the grants. I hope that the authorities recognise that the scheme is a bargain for home owners and for themselves as 95 per cent. of the cost of the grants will be returned by central Government.

House Purchase

Mr. Beith: asked the Secretary of State for the Environment if he will introduce measures to assist council tenants and families on council house waiting lists to buy houses in the private sector.

Mr. Gow: Such measures have been introduced already. Do-it-yourself shared ownership, which was launched on 24 January this year, enables council tenants and families on council house waiting lists, as well as other public sector tenants and first-time buyers, to select properties in the private sector for purchase on shared ownership terms within certain price limits. The Government also encourage a whole range of other low-cost home ownership initiatives, including shared ownership, homesteading, improvement for sale, building for sale and the home loan scheme.

Mr. Beith: Does the Minister recognise that the objective of wider home ownership cannot be pursued much further through the sale of council houses because those on the waiting lists will not find houses to rent and some council tenants do not want to buy the houses in which they are living? In many areas it will not be possible to pursue the policy much further without having an inadequate supply of housing for rent to meet local needs. Does he accept that the measures to which the main question refers need to be extended, as they will be cost-effective and potentially of great help to the private building industry?

Mr. Gow: I do not agree with the hon. Gentleman about the prospects for the sale of council houses. All the evidence suggests that the demand from tenants to buy their council houses is as strong as ever. I remind the hon. Gentleman that 550,000 such tenants bought council houses during the previous Parliament. I studied the Liberal party's manifesto and noted the suggestions that it put forward. As usual, it was promising to spend money without saying from where the money would come. That is a luxury in which any party can indulge when it has no hope of securing office.

Mr. Willie W. Hamilton: Will the Minister take steps to discourage council tenants or anyone else from buying the dangerous rubbish that is produced by Barratts?

Mr. Gow: We have already said that tenants who live in properties which are possibly in a defective condition should take great care when buying their council houses.

Mr. Heddle: Does my hon. Friend agree that the measures that he introduced yesterday will go a long way to meet the wishes of the majority who want to aspire to home ownership? Is it not curious that the Liberal party should join the Labour party in voting against the most significant measure that will increase home ownership throughout the nation?

Mr. Gow: Yes, my hon. Friend is right. However, there is a prospect that the Liberal party is redeeming itself for last evening. Some members of the alliance voted in favour of the Second Reading of the Housing and Building Control Bill.

Later—

Mr. Beith: On a point of order, Mr. Speaker. The Minister for Housing and Construction, perhaps unwilling to shake off his earlier supergrass role, commended members of the Liberal party and the Social Democratic party for voting for the Second Reading of the Housing and Building Control Bill in a Division yesterday. The Division list has not yet been printed in Hansard, hut I have it in my hands as marked by the Clerks in the Lobbies. I hope that the Minister will take the opportunity that I am sure you, Mr. Speaker, will afford him to accept that his claim is entirely untrue.

Mr. Speaker: That is more a point for the Minister than for me.

Mr. Gow: I apologise to the hon. Gentleman if I paid a tribute to him which he did not deserve. According to the unpublished figures, about half the alliance voted against the Bill and the other half abstained.

River Thames

Mr. Jessel: asked the Secretary of State for the Environment when he intends to meet the chairman of the Thames water authority to discuss the flows of water along the river Thames.

Mr. Waldegrave: My right hon. Friend has no plan to do so.

Mr. Jessel: The Thames water authority says that it intends to apply for complete powers to cut to nothing the flow of water over Teddington weir. Apparently it wishes to have that power without having to obtain Government consent when there is a strike or a drought. What action does my hon. Friend intend to take to protect the environment of the river Thames, wildlife and boating interests? Will he refuse to relinquish the power of control that his Department now has?

Mr. Waldegrave: Any proposal for a change in the powers to which my hon. Friend has referred will be subject to existing procedures. If there were objections, these would include a public inquiry. That would be the position if the proposal involved a general power or a certain variation.

Sir Bernard Braine: Is my hon. Friend aware that the River Thames Society, of which I am president, wholeheartedly supports my hon. Friend the Member for Twickenham (Mr. Jessel)? We are strongly opposed to the Thames water authority being given additional powers to abstract water from the Thames, which serves a wide area. Cannot the authority be encouraged to invest in further reservoir capacity, which it should have done a long time ago?

Mr. Waldegrave: My hon. Friend will understand that I cannot comment at this stage on the merits of the case as there is the possibility of such a proposal coming before a public inquiry.

House Building

Mr. Dubs: asked the Secretary of State for the Environment what was the total of public sector housing starts in inner London in 1978–79; and what is the expected figure for 1983–84.

Sir George Young: During 1978–79, 6,500 public sector dwellings were reported as started in inner London. My Department has made no estimate for 1983–84.

Mr. Dubs: Is not the truth that there was a disastrous fall in housing starts in inner London in the public sector as well as in the private sector over the years of the previous Conservative Government, which means that there is no hope of decent housing for the thousands of families with young children who are badly housed or living in tower blocks? Is it not right that the Government have no policy to meet the housing needs of the disadvantaged in inner London?

Sir George Young: No, that is not so. Starts in the private sector in London in 1982 were the highest for nine years. Public and private starts in Wandsworth, for the last year for which we have figures, were up nearly 100 per cent. over 1978–79.

Greater London Council (Abolition)

Mrs. Rumbold: asked the Secretary of State for the Environment, when considering the proposed legislation to abolish the Greater London council and the metropolitan counties, if he will endeavour to ensure that as many of the functions as are currently undertaken by them will either be abandoned or returned to the lowest level of local authority and not be given to appointed bodies.

Mr. Patrick Jenkin: Yes, Sir. Our aim will be to transfer as many continuing functions as possible to the borough or district councils. One or two functions will be administered by joint boards of borough or district councillors.

Mrs. Rumbold: I thank my right hon. Friend for that answer. Does he agree that one of the most important factors in carrying out the manifesto pledge is the reduction of rates for people who live in these areas? If so, is it not exceedingly important that this legislation be brought forward at the earliest possible moment?

Mr. Jenkin: Half the overspend is due to overspending by the GLC and ILEA. We intend to retain inner London education as a single entity, but it will be more accountable to the councillors of the inner London boroughs who will form the education board.

Mr. Robert C. Brown: During the last Parliament much was heard from Conservatives about the need to reduce the number of quangos. If the Secretary of State intends to abolish the metropolitan authorities, how does he intend to deal with services which must cover a large area, such as transport and fire services, without creating more quangos?

Mr. Jenkin: I am sure that the hon. Gentleman is familiar with the joint police authority formed by Tyne and Wear and Northumberland, which is a joint board of the two authorities. That is by no stretch of the imagination a quango. We envisage that that type of joint board will be necessary to administer the fire and police services outside London and the Inner London education authority, which would consist of councillors nominated by the district councils. By no stretch of the imagination could that be called a quango.

Mr. Shersby: When my right hon. Friend is considering legislation to abolish the GLC, will he consider abolishing the discretionary power to spend the equivalent of a 2p rate which is leading to massive abuse and the making of grants to weird and outlandish organisations which are not approved of by London ratepayers? Will he examine the possibility of replacing that provision with the power to spend a 1/2p rate, or something much lower than the large amount currently being doled out to these extraordinary organisations?

Mr. Jenkin: As my hon. Friend knows, the Government regard that provision as unsatisfactory. Last year we proposed legislation to replace it with something more rational, but the legislature felt unable to accept it. It is a problem that we must tackle. The abuses by some councils are quite unacceptable.

Mr. Oakes: As the Conservatives now desire to destroy the metropolitan councils, which were their own creation just over 10 years ago, merely because they are Labour-controlled authorities, will the right hon.


Gentleman explain how he intends police authorities to operate? Will he abolish them? Will he reinstate the old borough type police forces? If he creates joint bodies, will they not be appointed bodies of the type to which the hon. Member for Mitcham and Morden (Mrs. Rumbold) objects?

Mr. Jenkin: The general principle is that as many functions as possible should be devolved to the district and borough councils. That principle has a large number of Labour as well as Conservative supporters.
As I told the hon. Member for Newcastle upon Tyne, North (Mr. Brown), the solution that we envisage for police authorities is a joint board of the same type as exists in other parts of the country.

Mr. Alton: Does the Secretary of Slate accept that the creation of the county councils was one of the most unmitigated disasters of the 1970–74 Conservative Government? The majority of Merseyside people would welcome the abolition of their county council, but how much will it cost to wind up the county councils and will it be in time to prevent the next round of county council and GLC elections from taking place?

Mr. Jenkin: As I said in the debate on the Queen's Speech, there will be a White Paper this Session and a Bill next Session, and the changeover will take place on 1 April 1986. We shall have to take some steps in the meantime if we decide that the next round of elections should not be held. Experience suggests that these authorities are an unnecessary and extravagant tier of local government. We wish to make local government more local wherever possible.

Refuse Tipping

Mr. Hal Miller: asked the Secretary of State for the Environment if he is satisfied with existing provisions and their operation for the control of tipping, especially in green belt areas.

Mr. Waldegrave: We believe that improvements may be possible in some aspects of present controls and we are reviewing the relevant legislation.

Mr. Miller: I am grateful to my hon. Friend for his reply. Is he aware that the welcome increase in economic activity of all kinds has led to an unfortunate and resented increase in nuisance from tipping, which no level of authority appears willing or able to control?

Mr. Waldegrave: Particular problems derive from the exemption of the general development order in respect of tipping, allegedly for agricultural purposes, in green belt areas. We wish to examine that. Several other improvements are under review.

Inner Cities

Mr. Proctor: asked the Secretary of State for the Environment whether he has any plans to review his policy towards the inner cities; and if he will make a statement.

Mr. Arnold: asked the Secretary of State for the Environment if he is satisfied with the level of funds available for urban aid programme.

Mr. Patrick Jenkin: As I told the House on 23 June, the Government will maintain the strong commitment to the inner cities developed over the last four years. This is

demonstrated by the doubling of urban programme resources in that period to £348 million in the current year. We shall continue to give priority to the areas most in need and use public money to attract private sector investment and support self-help.

Mr. Proctor: Does my right hon. Friend accept that the Prime Minister's comment yesterday about Merseyside —that not all the problems can be solved by spending public money — applies throughout inner city policy? Does he further accept that some strains and stresses in the inner cities are not caused by an absence of resources? Does he also accept that there should be greater help for genuine voluntary effort to help the inner city areas to solve their own problems?

Mr. Jenkin: Not all problems are solved by throwing money at them. That is obvious wisdom. Nevertheless, when dealing with the dereliction and decay caused by many years of almost unbroken Labour administration, as is so often the case, there is no alternative but to help to prime the development with some public money. I hope that my hon. Friend will applaud the efforts of my right hon. Friend the Secretary of State for Defence, when he was Secretary of State for the Environment, in developing the urban development grant, which in the inner cities is now attracting £4 of private investment for every £1 of public money.

Mr. Arnold: During the current interdepartmental policy review, will my right hon. Friend seek a larger role for his Department's programmes at the expense of those of the Department of Trade and Industry, which have created serious anomalies as well as distorting competition?

Mr. Jenkin: I note carefully what my hon. Friend says. My Department is closely involved in that review.

Mr. Janner: Does the right hon. Gentleman realise that, far from throwing money at local authorities, the Government's meanness in dealing with these desperate problems has helped to exacerbate a dangerous position not only in the inner cities but in some outer areas with great council estates, such as Braunstone in my constituency, where unemployment is more than 60 per cent.?

Mr. Jenkin: I hope that the hon. and learned Gentleman will take note of the initiatives that have been taken on some of the great council estates, such as on Merseyside, where the private sector has come to the rescue and, through a partnership arrangement with the local authority, has succeeded in transforming the estates to such an extent that people are anxious to buy their houses and flats. When the hon. Gentleman is next in Merseyside, he should visit Cantril Farm estate or Minster Court to see what can be done by way of improvements.

Mr. Wheeler: Looking at the special problems of inner London, does my right hon. Friend agree that the City of London and the city of Westminster between them provide 30 per cent. of the rate base and that the rate equalisation scheme bears heavily on the poor and on the commercial community? Will he undertake to review that scheme at an early opportunity?

Mr. Jenkin: We must consider the way in which the scheme would work in the restructuring of government in London. People on low incomes are substantially


protected from high rates through the unified housing benefit and the rate rebate that goes with it. The problem of commercial rates in many inner city areas is one of acute crisis and one of the reasons behind our decision to take action on rate limitation.

Mr. Kaufman: As the Secretary of State has told the House how much he dislikes the 2p rate provision in section 137 of the Local Government Act 1972, how can he laud to the skies the urban development grant system which depends utterly on the section 137 2p rate under the Local Government Act 1972?

Mr. Jenkin: The right hon. Gentleman should not distort what I said. I do not dislike the section; I dislike the way in which some irresponsible Labour authorities are using it.

House Improvement Grants

Mr. John Evans: asked the Secretary of State for the Environment if he will increase the finance available to St. Helens borough council for house improvement grants.

Sir George Young: As I said to the previous hon. Member for St. Helens on 18 April, the Government have already taken steps to make additional capital resources available to cover spending on home improvement grants. Each local authority has been notified of an indicative figure for expenditure on improvement grants in 1983–84. Additional allocations will be available to any authority the expenditure of which on home improvement grants exceeds its indicative figure and the total housing capital expenditure of which exceeds its HIP allocation.

Mr. Evans: Does the Minister agree that his answer must be studied carefully as it does not seem to accord with the correspondence that he and I have had for some time? Is he aware that many hundreds of householders in St. Helens cannot obtain improvement grants because the local authority does not have enough money? Will he confirm that, at 73 per cent., the indicative figure for St. Helens is the highest of any metropolitan district, the average being 28 per cent.? Why is he treating St. Helens in such a peculiar way?

Sir George Young: We are not treating St. Helens in a peculiar way. Substantial resources are available to St. Helens in the form of £3 million of unapplied capital receipts and the capital receipts for this year. As this is a rather rarified subject, it would be best if I wrote to the hon. Gentleman after his local authority has had time to study what I have said.

Rates

Mr. David Atkinson: asked the Secretary of State for the Environment when he proposes to introduce legislation to reform the rating system.

Mr. Patrick Jenkin: Early in the new year.

Mr. Atkinson: Does not what is proposed in the Queen's Speech suggest that my right hon. Friend will introduce something that merely amounts to tinkering with the present system rather than abolishing it, thus perpetuating the unfairness and anomalies of the domestic rating system? Will he assure the House that he will grasp the nettle of the domestic rating system and introduce one of the choices set out in the Green Paper?

Mr. Jenkin: I shall make it clear in the White Paper that we shall publish towards the end of this month that the proposals in it represent the Government's considered response to replies to the Green Paper and to the report of the Select Committee on the Environment on the subject. We received more than 1,000 replies from individuals and organisations in response to the Green Paper. As was confirmed by the Select Committee, no consensus for any of the possible choices that have been canvassed as a substitute for rates has emerged. For the foreseeable future we envisage the rating system, reformed as proposed in the White Paper, as providing the main source of local government finance.

Mr. Chris Smith: In the light of the Secretary of State's reply, will he immediately reinstitute the review of rateable values that was scrapped by his predecessor in 1979? Is he aware that that action has led to extreme unfairness of treatment among inhabitants of identical properties in my constituency, to the extent that sometimes the rateable value of one house is three times that of the one next door?

Mr. Jenkin: The hon. Gentleman should await the publication of the White Paper.

Mr. Benyon: When my right hon. Friend considers reforms, will he give attention to one of the absurdities that is highlighted in the penalties announced yesterday? Is he aware that in a rapidly growing authority such as mine there can be no increase in the rate poundage. but we still suffer a penalty because we have to meet unavoidable expenditure?

Mr. Jenkin: In the few weeks that I have held my present post I have been made well aware of some of the rough justice that is inherent in the target system that my predecessors felt obliged to introduce in an attempt to persuade local authorities to budget responsibly. Not least of the difficulties is that to which my hon. Friend has drawn attention, concerning areas of rising population. The leader of Buckinghamshire county council spoke to me about that subject only yesterday. I have those points well in mind. To what extent I shall be able to deal with them in the imminent rate support grant is a matter to which I am giving urgent attention.

Mr. Kaufman: The hon. Member for Milton Keynes (Mr. Benyon) has drawn attention to the fact that his county is penalised to the extent of £7–75 million by the supplementary rate support grant report that the right hon. Gentleman published yesterday. As the Secretary of State said earlier today that he wants local government to become more local wherever possible, how will he convince Mr. Ian McCallum, who described the proposals in the White Paper as yet another big step towards more central control?

Mr. Jenkin: I am working on it.

Shared-ownership Housing

Mr. Heddle: asked the Secretary of State for the Environment how many people are in shared-ownership housing.

Sir George Young: About 7,500 people have bought homes on shared ownership terms over the past four years. My Department's estimates of shared ownership sales show a continuing marked increase from year to year over


that period, with over half of the sales taking place during 1982–83. There will be a further contribution to shared ownership from the do-it-yourself scheme introduced in January this year. The Housing Corporation has already approved over 400 sales under the new scheme, and the initial programme was for 3,000 units.

Mr. Heddle: Will my hon. Friend take time to study the relevant statistics in the Building Societies Association annual report, entitled "Housing Tenure", which was published last week? Is he aware that it shows that 80 per cent. of people in Britain, 45 per cent. of whom are council tenants, not merely want, but expect, to own their own homes in the next 10 years? Does my hon. Friend agree that provision for shared ownership in the Housing and Building Control Bill will go a long way to meet that demand? Will he ensure that that Bill receives Royal Assent with the utmost dispatch?

Sir George Young: I endorse entirely what my hon. Friend said. I regret that the Opposition opposed the Housing and Building control Bill last night. Shared ownership provides an extra rung at the bottom of the home ownership ladder, thus enabling people to get on to it earlier.

Rates

Mr. Knox: asked the Secretary of State for the Environment in what respects he intends to seek the improvement of the domestic rating system.

Mr. Patrick Jenkin: We shall shortly be giving full details of our proposed rate reforms in a White Paper.

Mr. Knox: Is my right hon. Friend aware that it is not acceptable for rates to remain the main source of local government revenue for the foreseeable future? Does he agree that the rating system is extremely unfair and requires much more radical reform than he appears to envisage?

Mr. Jenkin: My hon. Friend should await publication of the White Paper to discover the extent to which we are prepared to reform. In addition to our proposals for rate limitation, we propose to extend the availability of payment by instalments to small businesses, to impose an obligation on local authorities to consult business interests, to end rating of empty industrial property, to provide for separate notices for district and county elections and to provide for council tenants separate information on rates. Those changes will help to make the rating system, and local authorities, more accountable to ratepayers. That is what we need.

Mr. Hugh Brown: Does the Secretary of State agree that the Government have shown scandalous disregard for two election commitments to abolish domestic rates? Will the White Paper cover Scotland, although, of course, there will have to be separate legislative proposals?

Mr. Jenkin: The White Paper will cover England and Wales. I should make it clear to the hon. Gentleman that a commitment to abolish rates was not contained in the recent manifesto, nor in the one that preceded it.

Local Authorities (Expenditure)

Mr. Greenway: asked the Secretary of State for the Environment what is his latest estimate of total local authority spending planned for in 1983–84.

Mr. Patrick Jenkin: English local authorities' budgeted total revenue expenditure for 1983–84 is £20,905 million.

Mr. Greenway: Does my right hon. Friend agree that it is important for industry that rates be kept to a proper level? Does he further agree with the Labour-controlled borough of Tower Hamlets that the newly established consortium of five Labour-controlled London authorities, which is operated with ratepayers' money, is illegal? Will he do something about it?

Mr. Jenkin: I am aware that the London borough of Tower Hamlets has obtained legal opinion to that effect. With the help of my right hon. and learned Friends the Law Officers, I am considering the point carefully.

Mr. Madden: Will the Secretary of State show the understanding that he seems to have for the problems of Buckinghamshire to cities such as Bradford, which face considerable difficulties in responding to Government programmes, such as the youth training scheme, as they incur additional expenditure? When he returns to his office, will he inquire about a report that was sent to his Department nine months ago by Bradford metropolitan district council, which makes radical proposals for dealing with inner city decline and combating unemployment? Will he undertake to respond quickly to that report and to meet representatives of Bradford metropolitan district council?

Mr. Jenkin: I pay tribute to the way in which Bradford metropolitan district council has made strenuous efforts to meet the Government's targets and to comply with the Government's policy on public expenditure. The councillors deserve every credit for what they are doing. I shall consider how swiftly we can respond 10 the approaches mentioned by the hon. Gentleman.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 22 JULY

Members successful in the Ballot were:

Mr. John Whitfield
Mr. Michael Knowles
Mrs. Angela Rumbold

Orders of the Day — Finance Bill

Order for Second Reading read.

The Chief Secretary to the Treasury (Mr. Peter Rees): I beg to move, That the Bill be now read a Second time.
The House has already had the opportunity of a full and interesting discussion on the economy during the debate on the Loyal Address last week, so it is unnecessary for me to go over that ground again. Nor should this Bill be regarded as a commentary on the economic position of the country. It is a modest Bill designed largely to restore some clauses that were dropped from the Finance Bill earlier this year, following the announcement of the general election, at the instigation of the then Opposition. There will be an element of deja vu for those who took part in those interesting debates. I could hardly call it nostalgia since there is little nostalgia about Finance Bills, although perhaps the House will allow me to draw attention to one small nostalgic matter.
The debates on the Finance Bill in April were the last occasion when the former Member for Heywood and Royton, Mr. Joel Barnett— who occupied my present position with much distinction for many years —participated, and I mark my appreciation of his contribution to the many debates in which I was privileged to take part with him. Whether he will be given the opportunity in other places to take part in financial debates remains to be seen, but it would be improper for me to speculate about those opportunities.
My right hon. and hon. Friends and I believed that the House would not wish to stay here until well into August to debate the minutiae of other clauses that had to be dropped from the Bill.

Mr. Robin Cook: indicated assent.

Mr. Rees: I am glad to have the hon. Gentleman's assent on that. However, I shall mention some of those 50 clauses later in my speech. With superhuman restraint, which I hope will commend itself to the House, the Government have limited this Bill to 16 clauses and two schedules, which represent no more than 15 pages of legislation, should the House approve it. The overall cost will be £236 million this year and £403 million in a full year.

Mr. Robin Cook: The Chief Secretary will be aware that he has just committed a large tranche of public resources to a small section of taxpayers—the top 4 per cent. Before the Bill goes through the House, can he assure us that he does not intend to come back in the autumn with panic measures to cut the public expenditure that provides services to the poor, the sick and the unemployed, who will not benefit by a penny from this Bill?

Mr. Rees: The hon. Gentleman puts forward a partisan view of the Bill and seeks to detach it from the Bill which my right hon. and learned Friend the Foreign Secretary, who was then Chancellor of the Exchequer, with the able assistance of my right hon. Friend the Financial Secretary to the Treasury, piloted through the House in April. That

Bill gave much relief to many of our fellow countrymen, with 1,250,000 taxpayers being taken out of tax. That puts these measures a little more closely in perspective.

Mr. Robin Cook: rose—

Mr. Rees: I have already given way to the hon. Gentleman, which, as I am sure he will appreciate, is not always convenient at an early stage in a speech. I always recognise the force and coherence of his interventions, and I know that he would wish me to reply in full. I hope that panic measures will not characterise this Administration. I hope that we shall not have the spectacle of a Chancellor of the Exchequer being taken off an aeroplane to speak to Back-Bench committees, important though Back-Bench committees are. A guiding principle of this Administration —I take this occasion to reaffirm what my right hon. Friend the Chancellor said during the debate on the Loyal Address—will be the firm control of public expenditure. I hope that that reassures the hon. Gentleman and the House.

Mr. D. N. Campbell-Savours: Has the Chief Secretary read this morning's national newspapers, especially The Times and The Guardian, which outline arguments in the Cabinet between the Chancellor and other Ministers about cuts in public expenditure that are due later this year? How can he come before the House today and hand back money to a select few people in society, while at the same time he knows — as do all his colleagues on the Back Benches—that the Chancellor is running round the Cabinet like a madman demanding cuts in public expenditure? Do not the Government owe the British people some consistency in this highly important area? The hon. and learned Gentleman should give the assurances for which my hon. Friend the Member for Livingston (Mr. Cook) asked.

Mr. Rees: I have given some firm and full assurances. Before the right hon. Gentleman gets carried away by his rather indifferent rhetoric, I should point out that the Government are demonstrating remarkable consistency. It is precisely because they believe in consistency and in honouring pledges that when, at the insistence of the then Labour Opposition—perhaps the hon. Gentleman wishes to distance himself from what happened in April—some measures were dropped from the Finance Bill, my right hon. Friend the Financial Secretary said that we would restore those measures after the election. On that occasion, we were promised by the Opposition that they would introduce an autumn Finance Bill that would include swingeing tax increases, probably for all members of society. Luckily, that proved to be a rather chimerical idea, and we need not concern ourselves with it. Consistency was the hallmark of the previous Administration, and I can say without undue arrogance and with confidence that it will be the hallmark of this one.
This Bill is designed to restore some important tax reliefs that had to be dropped. Clause 1 provides for the income tax higher rate and the investment income surcharge thresholds to be raised by about 14 per cent. As the House will recall—again this is a measure of the consistency of this Administration—this was the same rate of increase enacted in the earlier Finance Act for the main personal allowances. Therefore, we are doing no more for the higher rate bands and the investment income


surcharge than has been done for the basic rate of income tax. I am sure that that will commend itself to any fair-minded hon. Member—and I emphasise fair-minded.
The indexation provisions for which my right hon. Friend the Chancellor was in part responsible during the years of the last Labour Administration would have required an increase of only 5·5 per cent. However, my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), now Foreign Secretary. thought it right to increase all the thresholds by 14 per cent. The magnitude of his achievement was probably over-obscured by the imminence of the election, but what he proposed and carried through took more than 1 million taxpayers out of tax altogether. That was a considerable achievement, and perhaps in due course Labour Members will wish to pay tribute to him when they catch the eye of the Chair.
As the House will recall, the same indexation rules as for the main allowances were extended to the higher rate bands and the investment income threshold by the Finance Act 1980. Therefore, we are merely carrying out what was foreshadowed then as well as in earlier debates in the spring. Under our proposals, the first higher rate threshold would be raised to £14,600 per annum and the subsequent higher rate bands adjusted accordingly. Similarly, we propose that the investment income threshold should be raised to £7.100.
This year, the cost of these measures over indexation will be about £80 million. and in a full year they will cost about £150 million. Had the Opposition had their way, and had these reliefs been deleted, it would have involved an additional 350 staff at the Inland Revenue, but I know that that matter is of little concern to Labour Members who seem to be reckless about the cost of administration.

Mr. Jack Straw: The Chief Secretary invites us to pay a tribute to his right hon. and learned Friend for the tax concessions made in the Budget. Before we do so, does the Chief Secretary agree that, even after the changes in the level of taxation proposed in the Budget, only those earning well over one and a half times average earnings have a lower tax burden this year than they did in the last year of the last Labour Government and that 90 per cent. of the population now pay a higher proportion of their earnings in direct taxation than they did when the Labour Government left office?

Mr. Rees: The hon. Gentleman reaches those somewhat extravagant conclusions only by treating insurance contributions as though they were taxation. I remind the House that insurance contributions in this country are far lower than those in most other western European countries.
That brings me to the administrative consequences of what was proposed in April and what we propose now. The House may recall that the last Finance Act provided that PAYE should be operated on the basis of the limits then proposed until 31 August this year. In consequence, should this provision commend itself to the House, there will be no need for any further PAYE changes.
Clause 2 proposes an increase in the profits limits for the purposes of the reduced rate of corporation tax for small companies. This rate has, of course, been cut from 40 per cent. to 38 per cent. by the last Finance Act. Despite the changes made in the last four years, one of the features of this part of the corporation tax structure is the high marginal rate between the limits. With the limits now

proposed, this marginal rate will fall from 60 to 55·5 per cent. It will thus be only 31/2 percentage points above the full rate of corporation tax. Our intention is that it should largely eliminate any discouragements to expansion by small and medium-sized companies. I hope that there will be common ground between both sides of the House on that objective.
Clause 3 increases the mortgage interest relief limit from £25,000 to £30,000. A £25,000 limit was set by the Labour Government in 1974, and house prices have risen somewhat since then. This limit is beginning to hinder a growing number of families who want to buy their first home or to move, particularly, but not exclusively, in the south-east. The increase that we propose is modest but reasonable, and it should help the construction industry as well as home buyers. That is entirely consistent with the Government's enthusiasm for home ownership, an enthusiasm clearly shown by the electorate in 1979 and, indeed in June this year—

Mr. D. N. Campbell-Savours: Why not use the money for council house repairs?

Mr. Rees: The plans of the hon. Member for Workington (Mr. Campbell-Savours) again to turn us into a nation of council house tenants engendered no enthusiasm whatever, even in his own constituency.
Clause 4 reintroduces provisions in the earlier Finance Bill to prevent excessive mortgage interest relief where employees also get interest-free loans from their employers. I am sure that the House will recognise the equity of that.
Clause 5 makes some technical amendments to the business expansion scheme which was introduced in the earlier Finance Bill. The details of the amendments are set out in schedule 1. They do not involve any alterations in the categories of investors or companies eligible for relief.
Clause 6 provides for three amendments to capital allowances for assured tenancies that were introduced in the last Finance Act to encourage the construction of dwellings for letting by approved bodies under the assured tenancy scheme. Two of the amendments merely make technical corrections and the third restricts the allowance to approved bodies that are companies.
Clauses 7 and 15 were not in the original Finance Bill, but they would have been tabled during the Bill's later stages had the Dissolution not intervened. They are inserted in this Bill because the need for them is immediate. These provisions will enable relief to he given against certain charges on capital gains tax and stamp duty that might otherwise have been incurred by local constituency associations when property changes hands as a result of the changes in parliamentary boundaries consequent on the recommendations of the boundary commissioners. Although this is a new provision not found in the original Finance Bill, I hope that it will commend itself to the whole House.
Clauses 8 to 13 reintroduce several capital transfer tax provisions that were in the original Finance Bill, in particular the proposed increase in the threshold to £60,000, the increases in the rate bands and the improvements in the reliefs for businesses and agriculture.
Clause 63 of the previous Finance Bill proposed rate bands similar to those for 1982 after indexation by reference to the change in price levels over the year ended last December. The amounts for most bands were,


however, somewhat more than rounded up to the nearest £1,000 stipulated by section 91 of the Finance Act 1982. The extra rounding was mainly intended to provide a more sensible graduation of the tax scale. It is proposed that clause 8 should take effect on the same day as clause 63 would have done—15 March 1983—so the effect would be as if clause 63 had never been dropped.
The capital taxes offices have not been finally settling the tax liability on transfers made on or after 15 March, so there should be no difficulty in operating this clause as from 15 March this year. The cost of these proposals over and above the indexed scales is estimated to be £5 million in 1983, £12 million in 1984–85 and £15 million for subsequent full years. This has already been accounted for in the Budget arithmetic.
Clause 14 provides exemption from development land tax for certain operations in connection with the installation of advanced telecommunications networks. Such developments could not have been foreseen at the time the development land tax was introduced, and it would be wrong for the Government's policy of encouraging further developments in this area to be frustrated purely because of this tax.

Sir William Clark: My right hon. and learned Friend has just said that the cost of the collection of certain taxes is extremely high. I presume that he would agree that the cost of the collection of development land tax is the highest in our fiscal system. I think that development land tax produces between £40 million and £42 million in revenue, but it costs £10·2 million to collect. Is it not about time that we had a long and serious look at this tax, which in many cases deters and inhibits development? Would it not produce more revenue to the Exchequer if only capital gains tax was paid on development land, and in addition would not that release far more land for development?

Mr. Rees: My hon. Friend, who has a deep knowledge of these matters, has opened up an interesting subject of debate. However, I cannot give the House any assurance that the extinction of development land tax is imminent. I do not doubt that my hon. Friend will take every opportunity to press a cogent case, but, as he will appreciate, the change that he desires might well involve the recasting of capital gains tax, and I cannot embark on that subject this afternoon.
Some 50 clauses were dropped from the original Finance Bill. They amounted to almost 100 pages of legislation, much of which was highly technical. The Government consider that it would be wrong to consider legislation of such a scale and complexity before we rise for the summer recess.

Mr. Donald Stewart: Why?

Mr. Rees: The right hon. Member for Western Isles (Mr. Stewart) appears to be keen to stay here into August and September. We hope that the House will agree that the proper course is to bring such measures forward in such a way that, if they wish, hon. Members will have an opportunity to consider them in detail in Committee. We shall take advantage of the intervening months to consider the comments made on the original Finance Bill proposals

by a number of representative bodies and others, so that the provisions in next year's Finance Bill can be prepared with the benefit of the fullest possible consultation.

Mr. Tim Smith: The fact that some clauses in the original Finance Bill do not appear in this one creates a difficulty about commencement dates. For example, clause 58(4) in the previous Bill would have increased the retirement relief for capital gains tax from £50,000 to £100,000. I am very sorry that that short and worthwhile provision does not appear in the present Bill. The original commencement date would have been 6 April 1983 and, understandably, some people started to plan their affairs on that basis. If such a provision is introduced next year, what will the commencement date be?

Mr. Rees: I understand my hon Friend's concern and I assure him that a clause modelled on clause 58 will find a place in next year's Finance Bill. I remind my hon. Friend that, although clause 58 increased the limit, it also withdrew a measure of relief. That demonstrates the complexity of the clause. I would not like, therefore, to give my hon. Friend a firm assurance about the starting date before we have considered the matter more carefully. Meanwhile, we will be happy to receive representations on that clause.
The oil taxation provisions also do not find a place in the Bill. Major fiscal provisions for oil were enacted in the earlier Finance Act, and the petroleum royalties (Reliefs) Bill is currently before the House. We feel that it is important to enact the remaining Budget proposals on oil as soon as possible, in order to end any uncertainty which may be holding back developments in the North sea. We therefore propose that those provisions should be contained in a separate Bill which will be introduced in the autumn. As will be recalled from 1975 and 1980, it is not unusual for oil tax legislation to appear in a separate Bill. I am sure that this procedure will lead to better consideration of complex and important provisions.

Mr. Peter Viggers: My right hon. and learned Friend has stressed consistency. It is extremely important to the building industry to know whether the stock relief provisions for houses taken in part exchange will be reintroduced. Are the Government committed to them, or will they be distracted by the lapse of time?

Mr. Rees: I can assure my hon. Friend that a clause —perhaps not precisely the same clause, but one that is the same in principle—will find a place in next year's Finance Bill. I should like to have time to think about the starting point and cannot give an assurance on that point at the moment, but I understand the concern of my hon. Friend and of the building industry.
This is a modest Finance Bill. I cannot guarantee that future Finance Bills will be of a similar length. The Bill does not provide a massive blueprint for tax reform—

Mr. Austin Mitchell: Handouts.

Mr. Rees: Not handouts, but the honouring of commitments honourably given earlier in circumstances which should bring a blush to the cheeks of the hon. Member for Great Grimsby (Mr. Mitchell). It is intended to put no gloss on the statement of economic policy given by the Chancellor of the Exchequer in the debate on the Gracious Speech. The Bill is a short, practical measure, and I hope that it will be welcome to the House. It reaffirms the Government's commitment to continue, as


circumstances allow, the reduction in the levels of direct taxation initiated by the previous Administration. I commend the Finance Bill to the House.

Mr. Jack Straw: I welcome the right hon. and learned Member for Dover (Mr. Rees) back to the Treasury Bench, and congratulate him on his elevation to the Cabinet after his exile to the Department of Trade. We look forward to many exchanges with him, and we hope that he will become a wiser, if not a better, man during his interlude at the Department of Trade. On behalf of my right hon. and hon. Friends, I also thank him for his kind words about our friend Joel Barnett, the former Member for Heywood and Royton, who will be sadly missed in the House.
This is a slim Bill. It is one of the shortest Finance Bills ever presented to the House. As the Chief Secretary to the Treasury pointed out, it is a fag end from the last Parliament, containing the clauses which Labour Members refused to allow through when the Prime Minister, in her dash for an early election, scuppered the chance of proper consideration of the legislative provisions in the March Budget.
The fact that the Bill is short and the fact that it is left over from the last Parliament should not obscure from the House the significance of the measures or the context in which they are presented. The Bill is modest, to use the Chief Secretary's words, but it is modest only in length. It is far from modest in its economic and social effect, and it provides a searching commentary on the Government's economic policy.
In our judgment, the Bill raises one central issue of great importance. At a time when the Government have already made many cuts in public spending and propose to make many more, is it just, fair or equitable for the House to agree to spend £60 million on additional mortgage tax relief, £50 million on additional cuts in capital transfer tax, and £280 million on tax handouts to the most wealthy members of our society? Such handouts are not only unjust, unfair and inequitable. When made by a Government who have presided ever the greatest increase in poverty and deprivation since the war, they are obscene and immoral.
On almost every day since 9 June, there have been announcements of bad news about the economy, bad news about the Government's policies to deal with that bad news, and forecasts of further bad news to come. Since 9 June, 21 major firms and employers have announced the loss of a total of 79,153 jobs. The latest unemployment figures, released last week, show that the trend in unemployment is remorselessly continuing on its ever-upward path. Despite wild claims about recovery, the level of manufacturing output is as depressed as it was a year ago. There has been the sharpest fall in our overseas trade yet witnessed in the post-war period. After a £4 billion surplus last year there was no surplus at all this year, even allowing for North sea oil and the earnings of the City. There has been the first-ever deficit on trade in manufactured goods since the Tudors. Prices—including petrol prices, as I discovered this morning—are going up. The mortgage rate has been pushed up by 1·25 per cent., leading to an immediate £11 a month increase in repayments for those with a £20,000 mortgage.
Yesterday we had the announcement that the money supply as measured by M3 was now way over the top of

the Government's 7 per cent. to 11 per cent. target, with a 1·75 per cent. increase this month bringing the annual rate to 16 per cent. This is a matter of great significance now, if only because of the misplaced importance which the Chancellor attaches to these worthless, clairvoyant signs—these tea leaves of economic indicators—which, the country has learned in the past four years, the money supply figures have become.
They are important, however, because the Government and the City are attaching such significance to them; and, as we have seen from this morning's newspapers, their misguided attachment to the figures is likely to lead them to even more misguided decisions which will force up interest rates—the markets have already started to move —and cut public spending even more.

The Financial Secretary to the Treasury (Mr. Nicholas Ridley): As the hon. Gentleman fought the election on the basis that the money supply figures did not matter and that the country needed a massive bout of reflation, surely these straws in the wind should be welcome to him. What is he complaining about?

Mr. Straw: I can see no circumstances in which an increase in interest rates and cuts in public spending, in the depths of a recession, should be welcome to any hon. Member. The prospect from the catalogue of bad news which we can see before us, as even the most sympathetic Government supporters must admit, is of dole queues continuing to lengthen, with many more thousands of people of all ages who want to work — who are desperate to enjoy the dignity of work to the point when many of them would do it for washers—being denied that chance.
The prospect is of any recovery — as the Prime Minister has admitted with her new-found post-election candour — being only patchy, and of being wrecked altogether by the looming balance of payments crisis, with a major fall in sterling, a rise in interest rates and a tight consumer squeeze. As I say, we are likely to see a depressing hike in interest rates in the wake of rises in the United States as part of the Government's response to the money supply figures.
The prospect is also of rising inflation, with almost all the forecasters predicting an increase of 6 per cent. by the end of this year and of 7 per cent. to 8 per cent. by the end of next year. In short—to answer the intervention of the Financial Secretary—Labour Members will shortly see confirmed our worst fears and predictions about the economy.
The Government know what a terrible state the economy is in, but what has been their response since the election? Has the response of the Prime Minister been to heed the words of the right hon. Member for Cambridgeshire, South-East (Mr. Pym) and use, as he suggested she should, her formidable talents to serve all the people of the country—not only those able to stand on their own feet, but those who cannot?
Have the Government given a moment's sympathetic thought to the worsening plight of our once-prosperous regions of Merseyside, the north-east and north-west, Scotland, Wales and the west midlands, which are facing more and more closures? Have they given a moment's sympathetic thought to the poverty and deprivation that those on the dole and their children now face? Have they given a moment's sympathetic thought to the increasing


burden which unemployment, poverty and the growing population of the elderly place on health, education and social services? Have they given a moment's consideration to the hardship which millions of pensioners will face this winter?
The answer to all those questions is no. Instead, what thought has been given to the economic and social life of that part of the nation which cannot stand on its own feet has made matters worse, and for many of those who are still standing the decisions which have been made may cripple them for life.
The responses to the mounting crisis in the regions has been for the Secretary of State for Trade and Industry to announce a review of industry aid, savagely cut back once in 1979, with the undisguised prospect of still more cuts. Those already on the dole have seen a dramatic reduction in their standard of living with the abolition of the earnings-related supplement, and now they face not the prospect but the certainty that from November 1984 unemployment benefit will be cut. I add my prediction that not only will the real rate of benefit be cut but that the period for unemployment benefit will be reduced from one year to six months and that the wage stop will be reintroduced.
The response to the increasing pressure on the education, social and housing services was seen yesterday, with cuts of £280 million being imposed on local authorities, especially those struggling with the greatest concentration of social and economic problems. That figure should be noted and savoured, for the figure of £280 million which was yesterday cut from the budgets of local authorities struggling to maintain their social and education services in our towns and cities is exactly the cost of the tax handouts to the very rich which we are today being invited to approve. Somehow the Government can find money when it comes to lining the pockets of their friends, but when it comes to providing money for desperately needed services they say that there is no more.
The response to the crisis in the Health Service has been to announce—behind an entirely fraudulent claim of a 0·5 per cent. growth — real and effective cuts in provision of 1·2 per cent. for the next five years. In response to the hardship which pensioners would, in any event, face this winter, the Government have taken away at least £50 from each pensioner by setting their increase at May's level of inflation instead of at November's.
All that has been bad enough. But, in Al Jolson's immortal words, "You ain't heard nothin' yet." Trapped in the web of monetarist dogma which Treasury Ministers have wound round themslves, the Chancellor now sees his only way out as further and large cuts in public spending, as presaged in this morning's newspapers.
My hon. Friends and I draw great significance from the fact that, when pressed first by my hon. Friend the Member for Livingston (Mr. Cook) and then by my hon. Friend the Member for Workington (Mr. Campbell-Savours) to say whether the stories in today's Guardian and Times about looming major cuts in public expenditure and a major review of public spending were correct, not once but twice the Chief Secretary ducked the question.
We can read the signs, and the nation should be prepared for a statement this autumn which will lead to savage cuts in every major spending Department, apart from defence. Those cuts will affect the constituents of

every Conservative Member elected on 9 June—I think I see the hon. Member for Loughborough (Mr. Dorrell) nodding in assent—as well as the constituents of every Opposition Member.

Mr. Stephen Dorrell: I was not nodding in assent. I was smiling at what the hon. Gentleman was saying.

Mr. Straw: The excuse which the Chancellor offered yesterday in a television interview was that the country could not afford its present level of spending and that, however painful or damaging, cuts there must be and cuts there would be.
It is clear that nothing will be sacred, except of course the living standards of those who are already extremely well off. It is here that we come to the obscenity of the Bill and the utter hypocrisy of the Government in introducing it. They cannot find £200 million to give the pensioners a fair increase in line with prices and they cannot permit democratically elected local authorities to spend £280 million on maintaining desperately needed services to the poorest and most vulnerable in society. They cannot find £400 million to protect the Health Service from further cuts and collapse, but through clause 1 they can find £280 million to give those, and only those, earning at least £17,000 a year—£350 a week—a most substantial and staggering tax reduction.
It is important for the Government to understand the scale of relief that the Bill gives to those earning over £350 a week and to compare that with the meanness and stinginess of the relief that is offered to the poorest in our society who are on benefits. According to the Treasury's press notice, under clause 1, a single person on £20,000 a year will receive a tax handout of £384 a year and a single person on £40,000 a year tax handout of £957 a year—£19 a week. Compare that with a single person's retirement pension, which will be increased by £1·20 a week or £65 a year. A married couple earning over £20,000 a year will benefit by £443 a year—£9 a week —and a married couple on £40,000 a year will benefit by £1,035 a year.
We can compare that with the amount by which a married unemployed couple or couple entitled to receive retirement pension will benefit. The retirement pensioners will receive an increase of £100, and the man or wife on unemployment benefit an increase of £140 a year.
There is a stark contrast between the way that the Government treat the already very rich and their treatment of the desperately poor. There is not just a contrast between the absolute amounts which the Government are giving away ; there is also a major contrast between the ways in which the Government use methods of indexation to justify these increases. Up-to-date indexation, and more, are used for the rich. In April it was possible for the Government to say that inflation had increased by 8 per cent., and that they would add that to a shortfall and increase higher rate thresholds by 14 per cent. However, it is not possible for the Government to say, "We know that inflation will increase by 6 per cent. in November," and increase the pension by that amount. Pensioners face not just a much smaller absolute increase in benefit, but a much more adverse calculation in terms of indexation of their benefits.
What makes the proposal in clause 1 even more craven and hypocritical is that this small group which is to benefit


—the 5 per cent. of the population earning over £17,000 a year—is self-evidently the group best able to carry the largest tax burden. Even before the 1983 Budget, it was the only group which had received major reductions in its tax burden over the previous four years of Conservative Government. Every other group, especially those on average and below average incomes, had suffered a marked increase in its tax burden.
The Chief Secretary spoke about the need for the Government to honour pledges. I wish that during the previous four years they had followed the Chief Secretary's advice, because in 1979 the Government—as all of us well remember—pledged to cut taxation at all levels of income. They met that pledge with reductions in direct taxation only for those on the highest tax rates.

Mr. Ridley: Rubbish.

Mr. Straw: It is not rubbish. Those figures were given by the Financial Secretary in answers to me contained in the Library—

Mr. Ridley: The hon. Gentleman has got them wrong.

Mr. Straw: No, I have the answers, which I used exactly as the right hon. Gentleman gave them. They are in the Library's brief No. 114. It is no good the Chief Secretary or other Treasury Ministers trying to wriggle out of their record by suggesting that we should ignore national insurance contributions as part of the overall burden of direct tax, because the Chancellor of the Exchequer in his Budget speech on 12 June 1979 said—I can put it in no better words:
It is the basic rate—plus, of course, the national insurance contributions—which represents the deterrent effect of tax on additional earnings".—[Official Report, 12 June 1979; Vol. 968, c. 260.]
It was the Government, not the Opposition, who said that national insurance contributions should be seen as part of direct taxation when it came to the calculations of the tax burden. By their own definition must they be judged.
The only moral justification the Government have ever proffered for their consistent policy of taking from the poor and the average paid and giving to the rich is that major taxation reductions for the highest paid have been needed to provide the essential monetary incentives to business men to regenerate industry and the economy. If there ever was a theory which has been so thoroughly disproved and compounded by events, this must surely be it. Increases in the post-tax income of managers, business men and others of the high paid have coincided with the worst relative and absolute decline of the British economy this century. It is worse even than that of 1929–31.
The incentive theory has been killed stone dead by the Government's policies and practices. With it goes any vestige of moral justification for what the Government propose to do.
Last evening, the Chancellor, in an interview on the BBC television programme "People and Power", said that the Government's fiscal priority was to raise real tax thresholds for the low paid
if we can possibly afford it".
Given the 50 per cent. increase in the burden of direct taxation on the lowest paid since the Government took office, it is a priority that we should all share. However, the Government have to choose. The Government could, if they wished, choose today to spend that £280 million on tax relief for the lowest paid and they could afford to do

so, even within their own Budget, if they cut these tax handouts to the rich. We all know that they will not make that choice. The Government's priority lies in the practice of the politics of greed—giving to those who already have and taking from those who have not.
In those circumstances, for the Chancellor to suggest that the low paid have any priority under the Government is the cruellest deception of all.

Mr. Ridley: We must get this straight. How does the hon. Gentleman explain the fact that real take-home pay increased by between 5 per cent. and 6 per cent. for all levels of taxpayers under the last Government although it decreased under his Government? How does he square that with the sort of things that he has been saying?

Mr. Straw: The right hon. Gentleman has his facts wrong. If he looked at the figures given by the Institute for Fiscal Studies and published in The Sunday Times on 20 March, he would have seen that real take-home pay—people's standard of living — has varied enormously under this Government according to their housing tenure and level of income. A company director earning £44,700 a year has gained £119 a week while a couple on pension have lost 91p a week and a semi-skilled worker living in a council house has lost £8·05 a week in real terms.
The Government's success is that they have been the first Government for 50 years to make the nation poorer. Real personal disposable income per head, as the right hon. Gentleman knows, rose by 12 per cent. between 1974 and 1979 under the Labour Government and fell under this Government by 4 per cent. What makes the Government's record even more abject is that the whole of the loss of national income has been borne by those people who are out of work while those who are already well off have enjoyed a substantial increase in their standard of living.

Mr. Ridley: Will the hon. Gentleman stop flannelling and acknowledge that under the last Government real take-home pay—disposable income—after tax and national insurance contributions, increased by between 5 per cent. and 6 per cent. for all sections of the population in work?

Mr. Straw: I am not flannelling in the least. I am giving the Financial Secretary the facts.

Mr. Ridley: The hon. Gentleman is not.

Mr. Straw: If the right hon. Gentleman wants to use averages when he talks about the standard of living he should choose the index which is published in his own Economic Trends—not the one about which he is talking —which gives real personal disposable income per head and shows incontrovertibly an increase in such income per head of 12 per cent. between 1974 and 1979 and a decrease of 4 per cent. under this Government, corresponding broadly to the decline in gross national product under this Government.
As I said, it is not true that everyone's living standards have gone up under this Government. That is an untruth. They have gone up for those who were already well off. If the right hon. Gentleman wishes to look at the details from the Institute for Fiscal Studies, he is welcome to do so. Living standards have gone down for the poor and collapsed for those forced out of work.
The Financial Secretary cannot avoid this second point. The Government pledged themselves to reducing the burden of taxation in 1979 and again in 1983. There is no doubt from the figures that he has given me so assiduously


over the past three years that the burden of direct taxation for all on one and a half times average income or below has increased under the Government to well above what it was in 1978–79.
The second major and controversial change in the Bill concerns the decision announced in the Budget to increase the mortgage tax relief to £30,000 from the present limit of £25,000. The proposal was discussed in detail just two days before the last Parliament was dissolved and will be discussed again in Committee. It is important to comment here and now on the principle raised by the proposal.
As a party, we have not only favoured the idea of owner-occupation but have done more to transform and improve the housing condition of the nation and extend home ownership in the private sector than the Conservative party has ever done. We introduced the option mortgage scheme. It was my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) who protected authorities' housebuilding schemes in housing stress areas and gave real, tangible assistance to first-time home buyers through the grants and loans scheme introduced in 1978. My right hon. Friend also conducted and published the most thorough and comprehensive study of housing finance and policy ever undertaken. One conclusion that emerged from that study was that indiscriminate housing subsidies—mortgage tax relief is one such—tended to help those already housed rather than those in need of housing.
There was evidence that over time the additional purchasing power that tax relief gave resulted principally in an increase in the price of housing rather than in the quantity of housing. That led to a view that was and still is widely shared across the House, that, while the existing tax relief should not be reduced, in a period of public expenditure stringency any additional cash for housing could be used more effectively in other ways. That was and still is a view held most strongly not just by Treasury officials but by Treasury Ministers. It was they who resisted all calls from their own Back Benchers in 1979, 1980, 1981 and 1982 for any increase of the £25,000 limit, who fought so fiercely this year against proposals from No. 10 for a major increase in the ceiling and who finally compromised at £30,000 against the clear wishes of the Prime Minister.
We are faced with priorities and choices. If there is £60 million to be spent on improving the housing condition of the nation, the question for Conservative Members as well as for the Opposition is whether it could be used far better in expenditure on local authority or housing association schemes, in direct help to the construction industry or in helping the Conservatives to fulfil their manifesto commitment in 1979 to provide direct help for first-time house buyers. We remember, even if Conservative Members do not, that that was their pledge. We also remember that when they were pressed twice in the previous Parliament to extend the grants and loans scheme, which was introduced by my right hon. Friend the Member for Bethnal Green and Stepney, the then Secretary of State for the Environment said:
My hon. Friend will remember that we referred to the desirability of such a scheme in our manifesto, but we made it absolutely clear that it had to follow improvements in the overall economic climate".—[Official Report, 30 January 1980; Vol. 977, c. 1337.]

There is now £60 million to be spent on housing and Conservative Members must see the sense in what I say. If one wants to help people to buy their houses, one does so directly with assistance to first-time buyers rather than give it away with such a benefit, which will inevitably lead simply to an increase in house prices and to a capitalisation of the tax allowance increase in house prices rather than to any overall benefit to most house purchasers.
Over time, that increase will do virtually nothing to help even those in the south-east who have to take out large mortgages to get even a half-decent home. We have already seen since last March—the proposal to increase the ceiling has contributed to it—a sharp rise in house prices, a mortgage famine and above all a steep rise in mortgage interest as a direct result of Government policy. For those with a £30,000 mortgage, the full-year benefit of raising the ceiling to £30,000—£165·40 a year—has already been wiped out twice over by the increase in interest rates, which added £300·70 to the mortgagor's bill. What the Government have given with one hand their economic policies have taken away with the other.
The third proposition in the Bill that cannot pass without comment on its Second Reading is clause 8, baldly and accurately entitled "Capital transfer tax" and "Reduction of tax". As my hon. Friend the Member for Livingston so eloquently said when we debated the proposal on 25 April, over the past four years the Government have chipped away at capital transfer tax with such success that it is now the only tax the yield of which this year, in constant prices, will be below the 1979 yield. With other often highly technical changes, the Government have transformed capital transfer tax from an effective method of redistributing wealth to a near-voluntary tax with more loopholes than the estate duty it replaced.
The reductions in the Bill will cost £40 million next year and £50 million in a full year. There is no greater testament to the practice of the politics of greed by the Government than that they can find £50 million to give away to those who inherit substantial sums upon the death of their wealthy relatives, but they cannot find £50 million to increase the death grant to £90 to help the least well off, with the costs—and the dignity—of a decent burial.
In a memorable speech exactly a week ago the right hon. Member for Cambridgeshire, South-East, the former Foreign Secretary, said:
We must see to it that this country never has to make the choice between being divided but rich, or united but poor. It is our duty to ensure that such a choice never has to be made." —[Official Report, 29 June 1983; Vol. 44, c. 606.]
Those words and the speech as a whole were rightly acclaimed by both sides of the House. The right hon. Gentleman represents the lost soul of the real Disraeli Tory party. It is his historic task to bring back some soul and heart to the 19th century Liberals who run the Government and masquerade as the 20th century Conservative party.
I have informed the right hon. Gentleman what I am about to say. He said that he was sorry, but for unavoidable reasons he could not be present. Words, however eloquent and well spoken, are not enough. People have to be judged by their deeds. The problem with the Tory wets in the last Parliament is that they were wet not only by name but by nature. In Pope's words, they were
Willing to wound, and yet afraid to strike".
It was worse than that. In the end, after all their hand wringing, conscience searching and fine speeches, the


Tory wets succoured and sustained the Government in the disastrous course that they have set for the economy and our people.
Today the House is faced with precisely the choice that the right hon. Gentleman said should never be made. It is faced with decisions involving spending £403 million on the most well off in our society, when the least well off are suffering cuts in their living standards and prospects that will further divide the nation. If the House passes these immoral measures, a major part of the responsibility for the way that they will further divide the nation will rest upon the right hon. Gentleman and all Conservative Members who cheered him to the echo last week. They could by a vote—or even by an abstention— tonight give the greatest possible warning to the Government not to proceed with such divisive and unjustified measures. If they fail to do so, they will be rightly treated with the contempt they deserve.
Men must be judged by what they do. We shall know tonight what judgment to make on those who claim to bear the torch of compassion and national unity within the Tory party.

Mr. David Howell: The House may have had the opportunity of discussing a Finance Bill in an earlier part of the year, but, for various reasons, I did not, so I am grateful now to have the opportunity of joining in the cut and thrust of discussion on financial matters.
I join my right hon. and learned Friend the Chief Secretary and the hon. Member for Blackburn (Mr. Straw) in paying a tribute to the former right hon. Member for Heywood and Royton, Mr. Joel Barnett. He and I spent many long happy and unhappy hours, as did the Chief Secretary, dealing with the miserable and ill-starred capital transfer tax, which was, and remains, a job-killing tax. Of all the measures put on the statute book in the last decade, far from being a great instrument of social justice, it has probably done more to deny jobs to the younger generation of school leavers and to prevent the emergence of new business than any other new measure of the previous Labour Government. We wrestled with it day and night in the 1970s. I am delighted that my right hon. and hon. Friends in the previous Conservative Government —I hope that the good work will be continued —succeeded in removing some of the appallingly anti-social and anti-job effects of that tax.
The former right hon. Member for Heywood and Royton also wrote an excellent book, which was a gold mine for those seeking to destroy the already flimsy intellectual case of the previous Labour Government, so we have many reasons for being grateful to him and for missing him now in this House.
I shall not comment at length on the speech of the hon. Member for Blackburn, except to say that his speeches seem to be a shade less uncongenial and wild than those of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). The hon. Member used the word "obscene" only twice, showing great moderation. Nevertheless, his speeches are equally wrongheaded and muddled, as I shall seek to show.
This Finance Bill, like the one introduced earlier in the year by the then Chief Secretary to the Treasury, my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), is, as was explained to the House, designed to increase incentives and competitiveness and thus,

presumably, to help in the search for those expansionary forces which are clearly needed to help along the very welcome but patchy and fragile economic recovery which is now beginning to emerge. If that is its aini—I am sure it is—the Bill is right, as are the Government in their policy, to rule out straight away any tax measures which would lead to a larger Budget deficit than planned, and to rule out any tax measures which would accelerate inflation.
Nowadays, a higher Budget deficit is a contractionary force in the economy. It is not — as it was, or was alleged to be, in the post-war years— a stimulus, but almost certainly a contractionary force. Therefore, when Opposition spokesmen propose measures which would lead to a higher Budget deficit, they are once again proposing measures which would lead not to greater economic activity and more jobs but to lower levels of activity and fewer jobs. The Finance Bill is right to eschew any approach of that kind, and the Government are right to rule out measures which might have an adverse effect on inflation because, as we know, that too is the great job destroyer, the killer of jobs and opportunities, which has done so much damage to Britain and its people in the past.
The House will not hear advocated from this seat or this Member anything in our financial debates which leads to higher deficits and borrowing, which leads tc higher inflation, which leads to raising taxes and rates against business, or which weakens financial confidence and therefore investment in new enterprises. Those four measures are the ones which we know from experience will lead to higher, not lower, unemployment and destroy, not create, jobs. They are the four horsemen of the unemployment apocalypse, and one can hear them clattering by every time speeches are made from the Opposition Front Bench on what we should do about the economy and unemployment. Nevertheless, having said that, I believe that there are things—

Dr. Jeremy Bray: At what stage would the right hon. Gentleman expect the evidence to begin to appear, if his argument is correct? Would he not expect that by now there should be some evidence that the reductions in the higher rates of income tax, the virtual abolition of the capital transfer tax, and so on, were having some effect on the creation of jobs?

Mr. Howell: The rate of inflation has only recently come down to the kind of low level that we need, but, of course, looking back over the last decade, we can see devastatingly clear evidence of inflation, a passion for high public spending, high interest rates and subsequent disasters on the budgetary side, leading to loss of competitiveness and the vanishing of whole markets in Britain, a surge of imports and immense damage to job opportunities. The evidence is there and it is clear. We are dedicated to reversing that process, because it was wholly wrongheaded. To repeat it, as the Labour party seems to want to do, is a perverse approach. Nevertheles, I believe that, within the constraints that I have described, there are some things that it would be right to explore and develop in order to help the expansionary forces which are now developing in the economy.
I had the opportunity a week ago to tell the House that I believe that there will be room for more Government capital investment. Of course, the plans have to be laid and they take time to develop. I doubt whether any


acceleration now in Government capital investment would have any effect for two years—that is an argument for getting on with it now—but I believe that, if it were done, it could have a nil effect on the Government deficit. Indeed, I argued last week, and would argue again, that if the Government were prepared to present their public expenditure proposals with a greater divorce between capital account and current account, that might have a beneficial effect on funding and, at a given level of interest rates, enable more money to be raised without any inflationary or overall effect on the deficit. I know that it lies somewhat outside the details of the Bill, but it is one area in which, within the constraints that I have described, it would be possible to move forward.
It should also be possible to move forward in the area of tax incentives. There are tax incentives—some of them are touched on in the Bill, but there are many others — which could be brought in which would revive enterprise and create more jobs without revenue cost. Therefore, given the constraint that I set down, which I believe is essential, and to which the Government are right to adhere—that there must in no case be tax measures which enlarge the deficit—some tax incentives could now be brought forward which would revive enterprise without a net effect on the deficit.
Some may say—and they may be on the Government Benches—that that is getting near to supply side heresy. Some may say that they are the sort of ideas that were put forward two or three years ago for taking risks by cutting taxes, in the belief that they will produce higher revenue in due course. Nevertheless, I believe that those suggestions should be examined. I realise that they are not consistent with that particular kind of mechanical monetarism, if I may call it that, which lays down—this can be seen in the proposals of some financial analysts — that there is a specific public sector borrowing requirement that we aim for on day one, leading to specific interest rates being delivered, and even a specific inflation rate. What I am saying is not consistent with that. That is an over-mechanistic approach. It is an example of what is called the fallacy of aggregates, which is a fallacy also to be found among the old school of demand managers which still has adherents on the Opposition Front Bench. It is the belief that the global aggregates of the economy can be engineered and manoeuvred in precise ways, which will deliver up certain precise results. In real life, that is not so. Quantities are rough, not precise, and the business of monetary management is an art, not a science. It is a cliché that the PSBR is the difference between two very large figures, and that the room for error between them is also very large.
The business of monetary management is an important art, and let there be no doubt in the mind of the House on that. It is essential that it achieves its role of lower deficits and lower inflation, but the art also permits, even demands, some expansionary tax cuts and Government investment measures. If I were asked to point to a particular expansionary tax cut, by which I mean a tax cut that could have a nil effect in a short time on the deficit and revenues, but would lead to more business enterprise and more jobs—it is from new enterprise that jobs for the present and next generation will come, not from large, established manufacturing enterprises—I would point to

the investment income surcharge. Although in the Bill there is a welcome change on the ceiling, it is still ridiculously low, and I should like to see it much higher.
In short—I shall try to stick to Mr. Speaker's rule of brevity for all and the utmost brevity for Privy Councillors — some expansionary steps can now be taken. Their effect will be slow. I am not sure that there is much else that could or should be done that is within the Chancellor's power to do within the next year or so. However, the steps must not be those that would enlarge the deficit or restart inflation, because both those consequences would be not a stimulus, but would be contractionary, weaken the economy and undermine jobs.

Mr. David Winnick: As a former Cabinet Minister, does the right hon. Gentleman believe that it would be right in any public expenditure cut for unemployment benefit and short-term supplementary benefit to be reduced in real value? What is his view, bearing in mind the reductions in income tax that quite rich people will receive as a result of the Bill?

Mr. Howell: If such proposals are to come before the House, we shall have an opportunity to debate them. My understanding is that no such proposals have been formulated to come before the House.
As to the hon. Gentleman's second point, he misunderstands, as does the hon. Member for Blackburn. If he is interested—perhaps he is not—in seeing new businesses start up, there must be an incentive for people to invest and make the necessary sacrifices to build up and accumulate capital. Taxes, such as the capital transfer tax that the previous Labour Government brought in, do much damage. Those policies prevented the coming into being of jobs that should but do not exist for his constituents. I do not understand the hon. Gentleman's attitude, or the morality behind it.

Mr. Straw: How can the right hon. Gentleman assert that given what has happened over the past four years when there has been a dramatic improvement in incentives through tax reductions for the higher paid, coinciding with the greatest collapse seen in our economy in the past 50 years?

Mr. Howell: The hon. Gentleman has been studying these matters for a fairly long time, but perhaps not for as long as his right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) who is experienced enough to understand the pace of cause and effect. The poisonous seeds of inflation, anti-business legislation and restrictive practices planted in the 1970s took time to grow into a harvest. We have seen that harvest, and it has been bitter and nasty. In the last Government, we sought—and I hope that we shall continue to seek—to plant a new harvest that will bear better fruit than the efforts of the Labour Government in the 1970s which did terrible damage to our economy.
An expansion of the Government's deficit and higher public spending would be a contractionary course and would destroy, not create, jobs. I know that some hon. Members on both sides of the House think otherwise and say that there is a balance to be struck between inflation and unemployment, as though, if we had a little more of one, we might get a little less of the other. But I believe that such hon. Members are using the wrong pair of scales. The reality is that the path to high and stable employment


—the goals of the 1944 White Paper which all hon. Members must share—lie via lower inflation. That is the necessary means to the end of higher employment, and the two are inseparable. That is an essential understanding that has not penetrated the mind of every Labour Member, but it is the path that we should follow.
There are expansionary steps on both tax and investment that can be taken now without straying from that path of sound money, which is the vital one to follow. The Chancellor recently said that the defeat of inflation was a necessary but not sufficient condition for economic recovery. I agree with that, but I also believe that tax cuts are a necessary precondition for, not a consequence of, economic recovery.
I welcome the Bill, but with a lively sense of anticipation that it is the precursor of better things to come and a lower level of taxation in this country.

Mr. Richard Wainwright: I am glad to associate the Liberals with what has been so rightly said about the presence of the Chief Secretary and the lamentable absence of Mr. Joel Barnett.
The right hon. Member for Guildford (Mr. Howell) made an interesting speech, and I hope that we shall hear much more from him about the lamentable neglect of capital expenditure by the previous Government and the lack of any recognition by the new Ministers of the damage done by that Government. I also welcome what he said about the fallacy of aggregates. I hope that the right hon. Gentleman will follow up his sound views on that fallacy when it comes to voting on the tyrannical behaviour of the Secretary of State for the Environment, who is virtually suppressing local government in Britain. That course of action is an indulgence in the fallacy of aggregates. I hope that the right hon. Gentleman agrees that the logical outcome of what he said is that the fiscal effects of £1 million spent in Newcastle are different from those of £1 million spent in Guildford or any part of the south-east. I hope that that line of thinking will be developed by the right hon. Gentleman throughout this Parliament.
A different picture from that presented by the right hon. Gentleman was given by the Chief Secretary. One of the many reasons why the Conservative party lost support at the last general election and has come back to this Parliament representing a smaller fraction of the electorate than it did before is its lamentable record on tax. It was distressing that on this first occasion, with a Government newly returned to power, with a new occupant of the position of Chief Secretary, we had such a dreary speech, with no sign of a fresh outlook on taxation, no hint that we might be learning something from the experience of other industrial countries that are far outstripping us in economic performance, and no commentary on tax reform. I hope that the new Chancellor of the Exchequer will not rival his immediate predecessor in so disappointing the expectations that have been aroused by a reputation for tax reform, which never materialised when it came to putting changes into practice.
I hope that it was made clear in debates last week that Liberal Members are opposed to what is almost threefold indexation. That is distinct from the view of the Labour segment of the Opposition. We are not strongly opposed to a 5½ per cent. indexation. There is much to be said for sticking to the principle of indexation unless there are strong reasons not to, but a 14 per cent. indexation is

unjustifiable. That is the main reason why I shall recommend my right hon. and hon. Friends to vote against the Bill.
A 14 per cent. indexation for taxpayers who already benefit more than anyone else from personal allowances is intolerable. The calculations are understood in the House, but perhaps not in the country. The personal reliefs are applicable to the highest rates of tax that a taxpayer suffers, and therefore, by the simple act of extending the single person's allowance and the married man' s relief, people on the highest incomes receive the highest benefit. To pile extra relief on that is unjust when people start paying direct taxation at the world record rate of 39 per cent. Liberals believe that it is indefensible for people whose incomes reach the level at which they become liable for direct taxation to be clobbered by direct taxation at the highest starting rate in the world. The Government's priority should have been to reduce the tax rate for incomes at the level at which they first incur direct taxation.
The Government have not recognised that much of the background for their Budget judgment in the middle of March has been proved wrong. It is a poor Government, especially when they have just been refreshed by a general election, who are not prepared to admit that they have sometimes been wrong. The central point of their fiscal approach has been proved wrong. The Budget was based on a PSBR outcome for 1982–83 of £7½ billion, but it has turned out to be £9 billion. Surely even in Conservative minds that should have caused a little unease that perhaps they were wrong in March, should own up and come back with something better in July. That has not happened.
I have nothing but contempt for the Chief Secretary's justification that the Government pledged that policy during the general election campaign. The Chief Secretary is a learned lawyer. He knows that it is no defence for a young burglar to go before a court and say, "I promised my dad that I would do it." The pledges should not have been made and the Bill should have been different.
I do not intend to weary the House with a repetition of what I said last week about mortgage relief. We have not had a Government Front Bench justification for singling out home ownership for tax relief on the interest on borrowing. Why should home ownership alone justify interest relief?
May we have an explanation of why a business man's Government, who pride themselves on knowing about such matters and apply their understanding of financial matters in practice, should deny relief on the interest directly incurred by having a larger taxable income? I shall give an obvious example. Someone, imbued with the Prime Minister's spirit of risk-taking and venturing, may lay out borrowed money to buy an asset that increases his taxable income. He may incur an annual interest charge of £100, but increase his taxable income by £200. What justification can there be for taxing the whole of the £200 without giving any relief on the £100 which was an essential part of the transaction and without which the £200 would not be there to tax?

Mr. Ridley: In the last two Budgets we included measures, which I thought were welcomed by the Liberal party, to enable people to borrow and invest in their own companies, with tax relief. That was extended this year to enable employees to buy out companies, with tax relief. That is an example of what the hon. Gentleman is calling for.

Mr. Wainwright: It is the only example, and therefore it is doubtful whether it is an example at all. It is an isolated incident— a poor spar of wood to which the Financial Secretary can cling in otherwise murky waters. Will the Minister explain why a Conservative Government fly in the face of ordinary financial equity in the treatment of interest for taxation?

Mr. John Townend: rose—

Mr. Wainwright: I am glad that someone is coming to the Government's assistance.

Mr. Townend: Can the hon. Gentleman confirm that his proposals would include tax relief on interest paid on overdrafts used to buy stocks and shares on the Stock Exchange, as was allowed before a Labour Government changed the system?

Mr. Wainwright: I am saying that if a Government relieve any kind of interest for taxation, and even increase relief on house purchase interest, should they not allow tax relief on interest paid to improve taxable income? The Minister should address himself to that problem, because it is fundamental.
Liberals find another measure objectionable. I refer to the lamentable approach to the taxation of capital wealth. I agree with the right hon. Member for Guildford that capital transfer tax was misconceived. The Liberal party has always said that. It is a tax on the donor. The late Winston Churchill said that it was foolish to tax people who had already left this world when the people who should be taxed were the recipients of the wealth. There can be no defence for wrecking the tax on capital transfers without putting something in its place. I hope that the Government will explain why they adamantly refuse to consider a sensible tax on the recipients of wealth. If they did that, the level of tax would depend upon the size of the gift received by the taxpayer.
A contemporary example involves the well-known manufacturing firm that produces the Baxi fire, which has been referred to recently in the House as a shining light for capitalism and which is prepared to give away its enterprise to the workers. If there were a tax on the recipients there would be almost no tax to pay on the whole of the Baxi enterprise. It employs 900 people, is worth many millions of pounds and could be distributed into 900 fractions. For that public-spirited act there would be no serious tax to pay.
That is what would happen in a sensible system of an accessions tax on the recipient of the gift. If the proprietors of Baxi decided to keep the business in the family and give it to the young Mr. Baxi, the tax that he would have to pay on being given a multi-million pound enterprise would, and should, be enormous. Such a tax is applied in the Republic of Ireland and in many other civilised countries, yet the Government consistently refuse to consider it or even to admit the justice of the principle. For those and other lesser reasons, with which I need not burden the House this afternoon, my right hon. and hon. Friends will vote against the Bill tonight.

5 pm

Mr. Michael Stern: The trembling in my frame at the moment is, I am sure, remembered by many hon. Members and their

predecessors from the first occasion on which they rose to address the House. Surprisingly, the knowledge of that fact does not seem to alter the feeling in any way.
It has been my fortune to inherit a constituency which was ably represented in the previous Parliament by two present and one former hon. Members who served with great distinction for many years. Before I pay tribute to their efforts on behalf of my constituents, I want to go back a little further in time and put on record my gratitude to a former Member for Bristol, North-West whose standards of honesty and dedication to the service of his constituents still stand as a beacon to all who succeed him. I refer to the late Martin McLaren, whose memory is still honoured with respect and affection by all those whom he once represented.
I am grateful for the energy and far-sightedness on behalf of my constituents which has been shown by my hon. Friends the Members for Romsey and Waterside (Mr. Colvin), and for Northavon (Mr. Cope), and by the former hon. Member for Bristol, North-East, Mr. Arthur Palmer. Their work over many years has made my path a great deal easier.
My forebears fled across Europe to escape from a series of persecutions and settled in Britain. Their sights were always set westward towards peace, security and the ability to live their lives in the way that they wished. Therefore, it is peculiarly fitting that I should come to the House to represent a part of the city of Bristol which has always looked westward for its trade and prosperity.
Five hundred years ago John Cabot set sail from Bristol with a crew largely consisting of Bristol mariners. They went forth with nothing but their faith and they returned with a continent. The city of Bristol has learnt from that time, that faith and that success. It is a city which has been built on commerce in all its forms and on the invention, industry and courage in new ventures of all its inhabitants, although I cannot help feeling that those qualities have sometimes been aided by the fact that they often speak a version of English which no one else can understand.
Bristol is not just a city of trade and industry, despite the great traditions and the future prospects of its port, and despite the depth of its involvement in high technology on which rest the hope and employment of so many of its people. It is also a city of great beauty and friendliness. In so many parts of my constituency every corner brings a new vista of charm and character and a new group of people anxious to show off their pride in their city and the country of which it forms so distinguished a part.
I regret that the Finance Bill continues an unfortunate trend which has gathered pace in recent years. Taxation law has become too voluminous and too unintelligible. I have a standard textbook on the law of taxation which sets out, without commentary, all the current statute law on income tax, corporation tax and capital gains tax. In 1978 the book contained 1,017 pages. The current edition contains 1,266 pages — an increase of nearly 25 per cent. in five years. The companion volume, which deals with capital transfer tax, development land tax, stamp duty and VAT, has increased by 84 pages, or 13 per cent., in the same period.
Is it any wonder that the law of taxation has become so esoteric that its study and understanding are now limited to an ever-decreasing body of professionals and that the average business man has to think at least twice before


embarking on any new venture because of the high professional fees that he will have to pay to avoid the many pitfalls and snares that have been put in his way?
Let no one think that the Government are alone in their record in complicating the tax system. In 1965, the then Labour Government turned the whole basis of taxation upside down and created such meaningless confusion that the system had to be changed again by 1971. The only effect of the change appears to have been that the legal and accountancy professions earned the unenviable reputation of containing the highest number of suicides and nervous breakdowns in any one year.
The Bill, short as it is, contains, I regret to say, some of the same failings. Clause 4 contains 59 lines of new anti-avoidance legislation and clauses 5 and 6 and the first schedule contain 125 lines of necessary amendments to legislation that has been passed by the House within the past year. In other words, more than one third of the Bill provides either new traps for the unwary or should never have been necessary in the first place. We are promised a further dose of technical tax legislation in the spring.
It is about time that we tried to stop this ever-onward march of greater complexity in tax legislation and instead looked for a way to simplify it. Britain once had a tax system which was the envy of the world in its clarity and overall justice. We have departed from those principles, always for good reasons, but I wonder whether we have gone too far. If we can start to move back towards a simpler tax system, we shall earn the gratitude of our constituents and we shall greatly increase respect for the House.

Mr. Brian Sedgemore: It is a delight and a pleasure to follow the gracious and charming speech of the hon. Member for Bristol, North-West (Mr. Stern). I come from the west country and I know Bristol to be a magnificent city—indeed, I once captained the Turk's Head hotel, Exeter, against the Byron house in Bristol at rugby, but I regret to say that we lost.
I was glad that the hon. Gentleman was both incisive and controversial in his maiden speech, although that is not my style. He said at one stage that some of his constituents spoke a language that some people in our country find difficult to understand. I say to him, "Us be always willin to yer from ee, my dear."
The economic prospects facing our country are so excruciating that some Opposition Members may wish to stop the world and get off. Fortunately or unfortunately, laws of motion and gravity make that a senseless exercise even to attempt. Opposition Members must come to terms with the concomitants that flow from the size of the Conservative majority, the cruel ideological bent of the Prime Minister and her Chancellor and the mood of the nation that is, alas, for the moment, docile, cowed, beaten, puritan, without reason, without hope and without pride. The tempo and temper of the general election showed just how much the character of our society has changed during the past four years. It revealed the existence in our country of a body of opinion, probably larger than in most other countries, that is insensitive and uncaring on such subjects as personal liberty, freedom of speech and meeting, tolerance and democracy. It is insensitive to and uncaring of what, broadly, we might call fair play and the guarantees for it.
The Opposition must accept that the Government have a mandate to dismantle such parts of our libertarian state that exist in favour of the authoritarian state, which is so much part of their dream. That does not mean that we must sit silent and frustrated, peeved and hurt, while the Prime Minister and her Chancellor systematically and deliberately mislead the House on economic matters. I listened to their speeches during the debate on the Gracious Speech — at first with interest, then with incredulity and finally in disbelief as they both moved from false premises to false conclusions via a logic that was characterised only by its defects.
I shall put aside for a moment the speech of the Chancellor and concentrate on that of the Prime Minister. The right hon. Lady is in charge—she is the Queen of Hearts for whom the Chancellor acts as the Mad Hatter, performs ludicrous deeds and makes silly and inconsequential statements from the Dispatch Box.
There was a time when Prime Ministers came to the House armed with facts, but on Wednesday 22 June 1983 she came to the House bringing with her only a mouthful of spit and a handful of dirt. It was not very pleasant. Early in her speech the right hon. Lady gave us her usual lecture on the evils of borrowing. In the four years from April 1979 to April 1983, the Conservative Government borrowed no less than £40·837 billion. That was the size of the public sector borrowing requirement. No Government in our history in a comparable period of peace have ever borrowed so much money. But the position is worse than that. In the last year of the Labour Government —financial year 1978–79—the public sector borrowing requirement was £9 billion. In the first full year of the Conservative Government, 1980–81, the public sector borrowing requirement was £13 billion. That clearly was the Prime Minister's annus mirabilis.
Before I came to the House today I looked back through a thousand years of economic history and discovered that no British Government in time of peace have come anywhere near to borrowing £13 billion in one year. Therefore, I think that we are entitled to ask how this Prime Minister, of all Prime Ministers, can dare to lecture the people of our country on the probity of balanced budgets and then go on to back up her arguments with ludicrous analogies drawn from family income and expenditure patterns that exist nowhere. It is rather like an alcoholic lecturing a teetotaller on the virtues of abstinence.
If that is not enough, the Prime Minister, with her grasp of economic matters, constantly tells the people of our country that they must be prudent and that as a nation we must reduce the size of the general Government deficit. Implicit in her arguments, which we heard before the election and during the election and have heard since the election, is the notion that, if only our country could bring down the size of its general Government deficit to that of the more prosperous countries of the Western world, we, too, could be prosperous.
In 1982—the last year for which figures are available — the general Government deficit in the United Kingdom was 2 per cent. of nominal GDP. The figures for the more prosperous countries of the world are as follows: in Germany, the general Government deficit was 4·1 per cent. of nominal GDP; in the United States of America the figure was 3·7 per cent.; in Japan it was 3·3 per cent.; and in France it was 2·9 per cent. For every country of the Western world that is more prosperous than the United


Kingdom, the general Government deficit, as a proportion of nominal GDP, was higher than in this country. In other words, the truth is the reverse of what the Prime Minister says.
Translating that fact into economic terms demonstrates that the policies advocated by the Labour party in its alternative economic strategy at the general election are those adopted by all the prosperous countries of the Western world. The policies advocated by the Labour party then are those advocated by the more prosperous countries, but the British Conservative Prime Minister told the British electorate that they were impossible to achieve.
The Prime Minister in her speech of 22 June, showing all her extraordinary misunderstanding of economic indices, went on to say that she would not print money. I suppose that for economic cognoscenti on the Conservative Benches the term "print money" is not a term of art. Let us give the Prime Minister the benefit of the doubt and assume that she knew what she was talking about when she used that phrase. Let us assume that she was talking about some measure of control of the money supply, possibly sterling M3.
In 1979, sterling M3 increased by 8·1 per cent. In 1980, it increased by an astonishing, staggering, unbelievable, incredible 19·1 per cent. In 1981, it increased by 13·2 per cent. In 1982, it increased by 9.7 per cent. According to figures published by the Bank of England yesterday, it is increasing now on an annualised rate by 16 per cent. That shows the printing of money on such a scale that I sometimes wonder whether our Prime Minister would recognise the truth if one were to spray it on her eyeballs. Having thrice made a fool of herself on an examination of economic indices, one would think that the Prime Minister would want to sit down and shut up—but not a bit of it.
In reply to the Gracious Speech, the right hon. Lady went on to say that the Government would introduce legislation to cap the rates in order to bring down local government expenditure, which she said had enormously increased. The phrase "had enormously increased" could only have been written for her by Humpty Dumpty:
'When I use a phrase,' said Humpty Dumpty with rather a scornful frown 'it means what I say it means—Neither more nor less.'
As a percentage of GDP at market prices, local government expenditure in the United Kingdom was 12·9 per cent. in 1979. In 1980 it was 13·4 per cent.—it had risen marginally. In 1981, it was back to 12·9 per cent. In 1982, it was down to 12·3 per cent. Those figures show that local government expenditure, whatever else has happened to it, has not increased enormously. One can only wonder whether the expenditure of £20 million by the Conservative party during the general election campaign, that being expended to tart up the Prime Minister's image, has taken the right hon. Lady away from reality altogether and driven her into the perverse world of mirrors beyond the looking glass.
Does it matter that our Prime Minister is an infertile economic illiterate? I believe that it does. She is the one who is entrusted with the government of our country. Despite her philosophy, it is within her power to make the people better or worse off. I believe that it matters, because without understanding there cannot be wisdom. Thus it is that the majority of the intellectual, thinking and academic world can give evidence to the Select Committee

on the Treasury and Civil Service criticising the Prime Minister for monetary policies that are too restrictive, interest rates that are too high and a pound that is hopelessly overvalued. She is driven on by her demonic belief in the nostrums of monetarism, which can only be characterised as an 18th century curse brought back to haunt the 20th century. She still impels our country towards oblivion.

Sir Hector Monro: Rubbish.

Mr. Sedgemore: The hon. Gentleman looks up from his book to say "Rubbish". I invite him to survey the industrial landscape. It reminds one of Dresden on the morning after Churchill's bombers had flattened it to the ground and fireballs had scorched the earth. It is apparent from our great industrial cities that Britain is becoming a backward and fractious island off the coast of north-west Europe with a culture that is in irreversible decline.
If the Government's policies are continued, within a short and measurable time—less than 20 years—Britain will become an extremely poor country. Only fools and knaves would disregard the warnings of that distinguished Cambridge economist, Wynne Godley, who has told us that import penetration could become so serious when North sea oil begins to run out in the 1990s that we may have to face hitherto unimagined levels of unemployment of 10 million plus as the balance of payments deficit becomes again the main constraint in our economic life.
If we are to deal with those major economic problems, we must consider our relationships with EFTA and the European Community. We must consider the rules that govern the GATT and the structure of the IMF. We shall have to consider the fundamental basis of the international monetary system. At the very time when that system is creating an illusion of stability through floating exchange rates, free trade and deflation, it is preventing the countries of the Western world from returning towards full employment. There is no sign that the Prime Minister and the Chancellor of the Exchequer are prepared to deal with those problems.
For about two minutes I shall leave the indulgences and absurdities of the Government's economic policies to comment on my constituency. I have two images of the constituency. The first was encapsulated in a profile presented by BBC television. The first shot showed some children playing on burnt-out cars. The second shot showed boarded empty houses. That is the Hackney that is suffering from 25 per cent. unemployment and where 1,052 youngsters are chasing 45 jobs. Vast areas are dying and the signs are there for all to see. On the day that film was shown I walked to Victoria park, which is mainly in Tower Hamlets and only partly in south Hackney. The deer, majestic and resplendent, were basking in the unconscious realisation of effortless superiority. The sun was glinting on the pond and the carnival atmosphere challenged the BBC's images. The truth is that at leisure the people of Hackney are caring, quick witted and good humoured. They are a delight to be with and a pleasure to live among.
The tragedy is that the two images, both true and both false, are expressions of the contradictions of a society steeped in culture that is yet being destroyed by its own barbarity. In part that barbarity is caused by the philosophy, the politics and the economics of the Government.

Sir William Clark: Oh, come on.

Mr. Sedgemore: It is for that reason that I return to the House not in triumph, but with humility, knowing that, like most of my right hon. and hon. Friends, I am powerless to do very much to alter the present course. I am on the verge of tears. I have one message for my constituents and for the British people generally. If they believe that they are threatened by forces darker than death or night, it is important that they should realise that those forces are conscious forces. They are the forces that have been willed upon us by the Government. They are precisely the forces that gave rise to the Queen's Speech and to this scrofulous Bill. At a time of crisis, they failed the nation. In so doing, they have shrivelled and diminished us all, and for that they should be rejected.

Mr. Michael Hirst: I thank you, Mr. Deputy Speaker, for calling me to make my maiden speech in this historic Chamber. I am proud and privileged to represent Strathkelvin and Bearsden, a new seat formed from parts of the constituencies of Lanarkshire, North, Dunbartonshire, East and West Stirlingshire. By a welcome piece of political alchemy, parts of those former Labour seats returned a Conservative Member. I am probably in a unique position in that my three predecessors are still Members of this place. They are sitting on the Labour Benches. Therefore, my tribute to them need not he especially reverential.
The right hon. and learned Member for Monklands, East (Mr. Smith) served my electors in Bishopbriggs for 13 years with great distinction. Both before and during the general election campaign I was made aware by the people of Bishopbriggs of the high regard in which they held him. I have known the right hon. and learned Gentleman for many years. He was my mercantile law tutor more years ago than I can remember. I was very much aware of his loyalties and attributes when I was a student and I am glad to know that in the meantime the House has further recognised him.
The hon. Member for Falkirk, West (Mr. Canavan) formerly represented the electors of Lennoxtown, Torrance and Baldernock. I know that he was well regarded as a hard-working and hard-hitting constituency Member.
The hon. Member for Cumbernauld and Kilsyth (Mr. Hogg) formidably represented the electors of Bearsden, Kirkintilloch and North Lenzie, which now forms a major part of Strathkelvin and Bearsden. The hon. Gentleman prevented me from getting into the House in 1979 but I bear him no malice for he has always been unfailingly courteous and helpful. He is one of the Members who welcomed me to the House three weeks ago.
I am frequently asked "Where is the constituency of Strathkelvin and Bearsden?" I can confirm to the House that it is north of Watford. For the sake of simplicity, I could describe it as a cluster of suburbs to the north and north-east of Glasgow. However, I fear that that description would do it a monumental injustice. In the north of the constituency there are areas of great natural beauty extending to the campsie fells. It is an area steeped in historical interest. The Antonine wall was built in 142 AD to contain the unruly northern tribes. The wall passes through the southern part of my constituency. Many forts were built along it. The three principal areas of population

—Bearsden, Bishopbriggs and Kirkintilloch—were forts on the Antonine wall. The constituency is blessed with remarkable archaeological evidence for posterity.
The name Kirkintilloch, which many have difficulty in pronouncing, is a derivation of the old Celtic words "caer pen tullich", meaning "the fort on the ridge". Kirkintilloch has produced an amazing number of industrial firsts. In 1773, the Forth and Clyde canal made it Scotland' s first inland port. In 1826, the Monkland and Kirkintilloch railway made it the first town in Scotland to be at the end of a railway line. The coalmining and iron foundry industries followed and the railway enabled Kirkintilloch's famous foundries to export their products throughout the world. Sadly, too few of Kirkintilloch's traditional industries remain. As with many other towns dependent on traditional industries, the shadow of unemployment has fallen over Kirkintilloch.
Bearsden and Bishopbriggs are pleasant suburbs without the long history of Kirkintilloch. In all the towns in my constituency there has been substantial expansion since the war, brought about by the building of new private housing estates. According to the 1981 census, Strathkelvin and Bearsden have the second highest level of owner-occupation in Scotland. I confidently look forward to that high level continuing as many more families take advantage of the right to buy their council homes.
A further fact of housing life in my constituency, however, is the high price of owner-occupation. Quite apart from the high rates, for the reform of which I shall work unremittingly, house prices in Glasgow are the highest in Britain outside the London area and oil-dominated Aberdeen. I am painfully aware of the high cost of housing. A parliamentary answer by the Chancellor in April showed that the average cost of tax relief per mortgagor was and consistently had been higher in Scotland than in the United Kingdom, in England or in Wales. Such are the general amenities and desirability of my constituency, however, that when people move home they tend to move within the same area and find themselves obliged to take on a sizeable mortgage for a house that suits their needs. A well-known building society has produced statistics showing that the average new loan in parts of my constituency this year is £28,300.
Members will not be surprised that I unreservedly welcome clause 3 of the Finance Bill. The threshold for mortgage interest relief was set at £25,000 in 1974 by a Labour Government. If the threshold had been adjusted in the meantime according to the index of new building costs, it would now be about £65,000. That shows the extent to which the £30,000 threshold proposed in the Bill has failed to keep pace with the effects of inflation on new building costs.
Ten years ago, £25,000 would have bought a desirable residence in most parts of my constituency. Now, sadly, £25,000 or even £30,000 hardly covers the cost of a new home for a first-time buyer. Many families in my constituency—standard rate taxpayers, not the rich to whom the Opposition constantly refer—have had to take on mortgages the interest on part of which is not subject to tax relief. I trust that my right hon. Friend the Chancellor will bear that in mind in establishing his priorities for the 1984 Budget.
An upward revision of the threshold for mortgage interest relief is not just desirable but essential for first-time buyers in my part of the world. I accept that such a


proposal entails a cost and that the Opposition may say that it would favour higher rate taxpayers. I venture to suggest a possible solution. If the threshold is increased by a reasonable amount, a concomitant would be to restrict the tax relief to the standard rate. In that way, mortgage interest would be treated on the same basis as life assurance premiums. That would seem reasonable to the country at large and probably to both sides of the House.
I make a further plea to the Chancellor about the cost of houses for first-time buyers in my constituency. Stamp duty is the sting in the tail of house purchase and is greatly resented by those who have to bear it. I hope that we shall work progressively to abolish it. I trust that in the meantime we shall review the threshold so that stamp duty does not become a disincentive to home ownership. Conservative Members are fond of stressing the commitment to a property-owning democracy — a commitment of which I am proud and an ideal which I share. Historically, our legislation has encouraged home ownership. We have given rights to council tenants. The Housing and Building Control Bill is further proof of our determination to help as many families as possible to put their foot on the first rung of the home ownership ladder. There should be equal encouragement to people to climb that ladder if they wish or need to do so.
I look forward to raising many matters affecting my constituents in the next five years and beyond. I thank right hon. and hon. Members for their politeness in hearing me today. I wish to place on record, too, my gratitude to the officials of the House. In the past three weeks, they have been unfailingly courteous and helpful to new Members such as myself, thus enabling us to settle in and feel at home in this, the mother of Parliaments.

Mr. Frank Field: It is a pleasure to congratulate the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) on his maiden speech. It is not all that long since I made my own maiden speech and I well recall my feelings on that occasion. No doubt the hon. Gentleman had similar feelings today. He spoke with wit and lucidity and his arguments about the clawing back of some of the advantages of raising the mortgage interest relief threshold were especially appreciated. We look forward to hearing further contributions from the hon. Gentleman. I salute the way in which he accomplished his difficult task today.
My hon. Friend the Member for Blackburn (Mr. Shaw), who opened for the Opposition, painted his picture with a broad brush. I shall take a narrower canvas. My starting point is the result of the general election, which throws up a challenge for both Conservative and Opposition Members. Early in this Parliament, the right hon. Member for Daventry (Mr. Prentice) said that, in view of the size of the Government's majority, it was the duty of Conservative Back Benchers to be more critical of their Front Bench than they otherwise might be. I hope that Conservative Back Benchers will follow that advice and cast a critical eye on three aspects of the Bill, but especially the mortgage interest relief provision. Specifically, I ask them to apply the ideas, beliefs and rhetoric used by the Conservative party in the election campaign to the arguments on the Bill. If they do that, I

believe that they will find it difficult to support the Government when we come to consider the detailed provisions of the Bill.
It is proposed that the subsidy for those who are buying their own homes be increased. That constitutes nothing less than a rigging of the market. Conservative Members, who preach their belief in the workings of a free market, know that if, in the short run, one increases the amount of money that people can spend on something its price will rise. The hon. Member for Strathkelvin and Bearsden is mistaken to believe that this proposal will bring much, if any, relief to his constituents. Indeed, in the short run the real price of housing will increase. That has also been the long-term effect. Although the right hon. Member for Guildford (Mr. Howell) preached about the supply side today, the market has not responded to the increased subsidies for house buyers which we have seen over the past few decades. If it had, the real price of housing would not have risen as it has.
This part of the Bill should also be rejected on the ground that it is paternalistic. The Government are helping people only if they behave as the Government want them to behave. It is a far cry from the rhetoric about people being given money and allowed to make a free choice. If that were the case, the Government would be proposing quite different measures. But just as the Bill throws out a challenge to the Conservative party, it throws out a challenge to Opposition Members.
I should like to ask my hon. Friend the Member for Livingston (Mr. Cook) three questions.

Mr. Nicholas Baker: Does the hon. Gentleman agree that the proposed alteration in mortgage interest relief distorts the market and that that is not desirable for several reasons? If so, does he further agree that it is partly the product of high taxation and that, if we could reduce income tax, that type of distortion would also disappear?

Mr. Field: That is a valuable point, but it is the problem of the chicken and the egg.
That brings me to the first question that I want to ask my hon. Friend the Member for Livingston. If we are to have revenue that can finance the level of public services that the Opposition require, enable us to reduce the rate of taxation and take people out of tax, the Opposition must advance more radical proposals than hitherto for changing the tax system.
The objective of the hon. Member for Dorset, North (Mr. Baker) could be achieved if more income was brought into tax. One reason for the high level of taxation is that every Chancellor of the Exchequer knows that, as he begins to draft his Budget, more than 50 per cent. of personal income is exempted from tax by one or more of at least 100 tax benefits. We are discussing just one of them today. The more generous the tax benefits, the narrower the tax base becomes. The result is that the starting point of tax is low and the marginal rates are made higher. I wonder whether my hon. Friend the Member for Livingston has had a chance since the election to consider how the Opposition will approach the problem of raising enough revenue to finance the welfare state and its development while cutting the rate of tax and raising the threshold at which tax becomes payable.
I hope that the House clearly understands that we support the principle of indexation to all tax and benefit


levels. What is unacceptable is that the 1979 Budget gave such major tax concessons to the very wealthy. Despite increases in the rates of tax which all taxpayers have had to pay since then, only the wealthy have enjoyed a reduction in their tax burden. Moreover, the Government have calculated the rate of indexation for the highest rate taxpayers differently from the increase in benefit levels for the poorest people which will come into effect later this year.
I do not need to remind my hon. Friend that, while surtax payers have benefited by about £200 million, each of our constituents receiving benefits, such as an old age pension, will lose the equivalent of one week's benefit this year as a result of the way in which the Government have calculated indexation for welfare beneficiaries. I hope that when we divide on this issue the Opposition will be going on record as voting against not the principle of indexation, but the unfair way in which indexation has been applied to different groups of the population during the previous Parliament, and now at the start of this one.
As my hon. Friend the Member for Blackburn said, the previous Government dismantled capital taxation. The final act in that tragedy is being played out today. As there will be no effective capital taxation when the next Labour Government take office, it is appropriate to discuss the form that capital taxation should then take. Will we push for the re-establishment of the old system which took from the wealthy and gave to the Exchequer, or will we use the opportunity to create capital taxation that takes from the wealthy and spreads the money around? Bacon said:
Money is like muck, not good except be spread.
The scale of Labour's election defeat throws up a challenge to Conservative Members about the extent to which, in the early stages of this Parliament, they will form part of the Opposition. If they believe half of the rhetoric that they employed during the general election campaign about the need to encourage the free market system and to be non-paternalistic, the Government will have great difficulty in getting through their proposal to raise mortgage interest relief.
The scale of Labour's defeat also throws up crucial questions for the Labour party. I have posed three to our Front Bench. I shall summarise them. First, what tax reforms will we propose if we form the next Government? Will we be able to keep all the balls in the air — increasing provison for the welfare state, cutting taxation and raising the threshold at which tax becomes payable? The only way to achieve that is to tax all incomes. Will we be so radical? Secondly, what will be done about indexation? Thirdly, how will a Labour Government spread wealth effectively?

Mr. Stephen Dorrell: The hon. Member for Birkenhead (Mr. Field) can always be relied upon to pose interesting questions to the House. Although we enjoyed his speech, I suspect that the hon. Member for Livingston (Mr. Cook) enjoyed it less in anticipation of having to explain at 9 o'clock tonight how one squares high starting points of tax with low rates of tax and high public expenditure. That question, together with the two others posed by the hon. Gentleman, was interesting, and the House will listen carefully to the answers of the hon. Member for Livingston.
The House will agree that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) made an

enormously distinguished maiden speech. He discussed the impact of Government taxation measures on housing finance in his constituency, which has been repeated in the constituencies of many hon. Members, and we listened with considerable interest to his important points. We look forward to listening to many more speeches of equal distinction in the near future.
The boundary commissioners are men of extraordinary influence, because in this Parliament many unlikely people can claim to be maidens now. Even those with scant claim to maidenly status have some maidenly duties to perform in their first speeches in this Parliament, and my duty could not be more pleasant. This is the first time that I address the House as the Member for the new Loughborough constituency, which no longer extends from the town of Loughborough into the Leicestershire coalfields but extends from the town of Loughborough to the city of Leicester and to Charnwood forest. I have inherited many villages that used to be in the constituency of my hon. Friend the Member for Rutland and Melton (Mr. Latham). All hon. Members know of his reputation as an effective and regular exponent of his constituents' interests, and I am grateful for the opportunity to put on record my appreciation of his work in the area that I now have the privilege of representing. During the general election campaign, I saw clearly that his former constituents also appreciated his efforts.
As my right hon. and learned Friend the Chief Secretary said, this Finance Bill contains the leftovers from the 1983 Budget for which the Opposition refused to allow the Government to legislate in the dying days of the previous Parliament. As my right hon. and learned Friend said, it is inevitable that we should be dominated by a sense of deja vu when discussing the issues contained in the Bill. However, perhaps Second Reading of the second half of the Finance Bill 1983 is an opportune moment to review the progress of the Government's economic strategy. I suggested during the Budget debate earlier this year that the measures set out in the Budget should be not only supported by the House but subject to regular review by the House to ensure that the strategies of my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), the previous Chancellor of the Exchequer, achieved their targets.
Since the Budget was delivered on 15 March there has been good news, but some dangers have become clearer, and there is much to consider in this debate. The good news is that the beginning of a modest and, as my right hon. Friend the Prime Minister said, patchy recovery in March has continued and strengthened, so that my right hon. Friend the new Chancellor of the Exchequer could say last week that he was upgrading his estimates of the growth in GDP this year. Our domestic recovery has continued, and, if anything, the pace of recovery has marginally increased.
The other good news, of which the House should take due cognisance, is that the recovery in the United States and in continental Europe, which was also apparent at the time of the Budget, has continued, and growth projections for those areas are also being upgraded. The news of a slow, patchy, but clear recovery in economic activity has been confirmed by the experience of a further four months, and the House must recognise that when it discusses the economy.
However, some dangers have become clearer during the past four months. The first danger is that, although the


recovery has continued and is welcome, most analysts agree that there is precious little sign of the recovery broadening out from being simply a recovery based on the decline in the savings ratio and an end to destocking. There is little evidence that it has taken root as a firmly based recover, including investment, and my right hon. Friend the Chancellor would be the first to say that a key objective of his economic strategy must be to ensure that the economic recovery is encouraged and becomes more broadly based.
The second danger, upon which all economic commentators are agreed, is that we still do not have a long-term solution to the international debt problems that have overhung the entire recovery and been the background against which economic policy has been made for 12 months, and where there has been continued uncertainty. I hope that my right hon. Friend the Financial Secretary to the Treasury, who is to reply to the debate, and my right hon. Friend the Chancellor will take those matters into account.
The third danger, which Opposition Members may prefer to ignore, is a fact with which the Government must live and deal during the coming months.

Mr. Campbell-Savours: We enjoyed several interventions by the hon. Gentleman during the previous Parliament. From the day of his election in 1979, he persisted in drawing attention to the inadequacies of the Government's economic strategy. Instead of making those contributions on the Floor of the House during this Parliament, will the hon. Gentleman put his vote where his mouth is and vote with the Opposition?

Mr. Dorrell: If voting with the hon. Gentleman implies endorsement of economic lunacy, such as we heard from the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore), you may be confident, Mr. Deputy Speaker, that nothing could drag me into the Division Lobby with the hon. Gentleman.

Mr. Robin Cook: Before the hon. Gentleman leaves on the record the assertion that my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) was advocating economic lunacy, perhaps he will place on the record a single statistic that my hon. Friend got wrong.

Mr. Dorrell: The hon. Member for Hackney, South and Shoreditch, who did not use many statistics in his speech, asserted that we need a massive expansion, such as was advanced by the Labour party during the election campaign and which was decisively rejected by the electorate.
The hon. Member for Workington (Mr. Campbell-Savours) said that I advocated massive expansion. If he reads what I said in the Budget debate four months ago, he will see that I endorsed the Budget judgment of my right hon. and learned Friend the then Chancellor of the Exchequer, because it represented a balanced economic package that was likely to bring Britain out of the recession and into economic recovery in a responsible manner. Our experience since March suggests that that analysis was right, and that is the case that I shall develop.
The third danger that Opposition Members may prefer to ignore is renewed signs of nervousness in the financial

markets about the balance of the March budget. The Bank of England has had to support sterling's foreign exchange rate, and there has been much talk about the gilts market being weak and of an upward pressure on interest rates. It has been said that the reason for those signs is that the public sector borrowing requirement is slightly ahead of the projections that were published at the same time as the Budget, and that the money supply is ahead of the Government's target.
That has been the official explanation for the renewed signs of nervousness. While those factors are not unimportant, one of the things that is leading to nervousness in the financial markets is the fragility of the recovery about which I have been talking. If we can strengthen the recovery, our Government deficit will fall, due to the fact that increased revenue will come in as the recovery takes its course, but if we now respond to financial nervousness by deserting the Budget judgments of four months ago we shall be contributing to rather than curing that nervousness.

Mr. Straw: Do we ordinary mortals understand the hon. Gentleman to be warning the Government not to cut public spending even more? Is that really his message?

Mr. Dorrell: The hon. Gentleman will have his question answered if he listens to my next passage.
Britain is now well placed to continue on the course that Conservatives supported when it was set out by the then Chancellor in his Budget earlier this year. I welcome his refusal, and the refusal of his successor in office, to be panicked into early decisions to reverse policies on the basis of one or two months' figures.
Labour Members have whipped up paper tigers on the basis of preliminary discussions about what may happen in the public expenditure review. That review will take its course, but it has become almost traditional at this time of year to spend much time arguing in defence of policies that the Government have not adopted. In general, not many analysts would disagree with the view that the deficit that we now face is not wildly out of line with the expectations that existed at the time the Budget was introduced. I supported the Budget judgment in March. I believe that it was right, and I now believe that to desert that judgment would exacerbate rather than reduce the financial nervousness that has occurred in markets in recent days.
That nervousness underlines the widely recognised need to continue with the two things that the Government have already made clear they wish to do. The first is that they wish to continue the work started by the previous Chancellor of the Exchequer to deal with the problems of international debt. My right hon. and learned Friend the Foreign Secretary undertook some important work as chairman of the interim committee of the IMF to try to produce a solution to some of the difficult problems confronting some of the debtor nations. He understood —and I am sure that his successor does—that it is not in the interests of any western country to provoke one of the big debtors into default, because, beyond any doubt, that could kill the recovery that is now taking place in the western world.
The comments made during the election campaign by the former Labour Chancellor, the right hon. Member for Leeds, East (Mr. Healey), demonstrated a quite extraordinary willingness to gamble with the economic well-being of the west by needlessly provoking Latin


American countries into defaulting on their debts. I hope that the present Chancellor will continue the work of his predecessor to find an orderly way out of the undoubted problems of international indebtedness that we now face.
The second thing, which I very much welcome, is the review that the new Chancellor initiated when he came to office of the basis of the Government's monetary policy. In the pre-election period, our monetary policy was shifted away from a reliance purely on the monetary aggregates as the meter by which that policy was measured. There was a move to measure it by reference to monetary aggregates, the foreign exchange rate for sterling and asset prices in general. I very much hope that that process will continue and that the result of the monetary policy review will be to confirm the Government's commitment to sound money, without which there can be no economic expansion and recovery. I also hope that that commitment to sound money is based on a broad analysis of the monetary forces working in the economy and that it does not resort purely to a mechanistic reliance on a single indicator of monetary conditions.
Lord Butler once said that popular Budgets tend to produce unpopular summers and that unpopular Budgets tend to produce popular summers. We all know what he meant—that a short-term Budget can lay up long-term problems. The Budget introduced in March was right. I said so then, and, although some hon. Members may not find that the words come easily from my lips, I hope that the Government will not now indulge in U-turns.

Mr. Tony Blair: I thank you, Mr. Speaker, for allowing me this opportunity to make my maiden speech, especially on such an important Bill, as the new Member of Parliament for Sedgefield. I only hope that I can acquit myself as well as the hon. Members who have preceded me in this difficult task.
Sedgefield is in county Durham, and having lived there for almost 20 years it was an especial honour for me to be chosen by the Labour party to contest the seat. Given the Labour party traditions of county Durham, my subsequent election with a good majority was hardly surprising, but it was no less pleasing to me for that.
The constituency is remarkable for its variety and contrast. In the north-west is the large modern conurbation of Spennymoor, flanked by old mining villages, such as Chilton and Ferryhill. Turning east, one travels through more villages such as West Cornforth, Bishop Middleham, Trimdon Village, Trimdon Colliery and Fishburn, and still further east there are the villages of Wingate, Thornley, Wheatley Hill, Deaf Hill and Station Town. Although most of those villages share the common history of mining, they also have their own distinctive and separate character.
Sedgefield town itself is at the crux of the constituency. It contains some new industry, the important hospital of Winterton and also has its prosperous residential parts. Travelling south from Sedgefield, one enters a different world altogether. One can tell that it is different because it is the place where the Social Democratic party ceases telling the people that it represents the Labour party of Attlee and Gaitskell and begins saying that it represents the Tory party of Butler and Macmillan. Its towns include Hurworth, Middleton St. George, Whessoe and

Heighington. It is sometimes suggested by the fainthearted that Labour support is less than solid here, but I have great faith in the good sense of the people.
This new Sedgefield constituency is made up of parts of several other constituencies, and I pay tribute to the hon. Members from those parts—my right hon. Friend the Member for Durham, North-West (Mr. Armstrong) and my hon. Friends the Members for Easington (Mr. Dormand), for Bishop Auckland (Mr. Foster) and for City of Durham (Mr. Hughes). I am grateful that they are all here as colleagues in this Parliament.
Though new in 1983, Sedgefield as a constituency has in a sense only been in hibernation, as it existed as a constituency until 1974. Distinguished predecessors have represented Sedgefield, the last three being John Leslie from 1935 to 1950, Joe Slater from 1950 to 1970 and David Reed from 1970 to 1974. Their maiden speeches provide an interesting synopsis of south-west Durham's history.
In the 1930s, John Leslie spoke of the poverty of his constituents, particularly the mines. However, in 1950, Joe Slater, himself a miner, described a better world where under public ownership
the views of the miner are respected, and even acted upon, and that is how it ought to be". — [Official Report, 29 March 1950; Vol. 473, c. 489.]
That was a speech of optimism. David Reed, who like me had the distinction of being the youngest member of the parliamentary Labour party, also spoke with some optimism. He pointed out that the mining pits had largely closed but said:
The influx of new industry into my constituency has shown a remarkable increase during the last five years".—[Official Report, 7 July 1970; Vol. 803, c. 530.]
In my maiden speech, I would have hoped to continue the theme of progress and optimism, but it is with the profoundest regret and not a little anger that I must say frankly that I cannot do so.
The speech most appropriate to my constituency now is not the speech made in 1970 or even the speech made in 1950, but the speech that John Leslie made in the 1930s. In that speech, he said:
Everyone will agree that it is nothing short of a tragedy that thousands of children are thrown on to the labour market every year with no possible propect of continuous employment, with the result that thousands drift into blind alley jobs and drift out again. They have no proper training, they feel that they are not wanted and the future seems hopeless."—[Official Report, 4 December 1935; Vol. 307, c. 213.]
That is tragically true for my constituency today. In the area of the Wingate employment exchange, which covers a very large part of the constituency, unemployment now stands at over 40 per cent. A large proportion of the unemployed are under 25 years of age. It is said with bitter irony that the only growth area in the constituency is the unemployment office. Those young people are not merely faced with a temporary inability to find work. For many, the dole queue is their first experience of adult life. For some, it will be their most significant experience. Without work, they do not merely suffer the indignity of enforced idleness — they wonder how they can afford to get married, to start a family, and to have access to all the benefits of society that they should be able to take for granted. Leisure is not something that they enjoy, but something that imprisons them.
The Bill offers no comfort at all either to those people or to the vast majority of those of my constituents who are fortunate enough to be in work. Indeed. it adds the insult


of inequality to the injury of poverty. It gives a further clutch of tax concessions to those who are already well off. Some 200,000 people are taken out of the higher rate bands, whereas only 10,000 come out of the poverty trap. That is a good illustration of the sense of priority shown in the Bill.
When I say "well off" I mean very well off. It is not those who earn the average wage who have benefited from the Government's fiscal policy, or even those who earn double the average. The only beneficiaries are those who earn more than three times the average. It is to that tiny and rarefied constituency that the Conservatives address themselves. The provisions of the Bill contradict in practical terms the myth that the Conservative party is the party of lower taxation for the people. In reality, lower taxation under the Conservative Administration has been confined to an exclusive club of the very privileged.
You may wonder, Mr. Speaker, why, contrary to tradition, some maiden speeches have been controversial. Perhaps it is pertinent to ask in what sense they can be controversial, since the deprivation and unhappiness that afflict our constituencies seem beyond argument. What impels us to speak our minds is the sense of urgency. As I said, in the Wingate area, unemployment is over 40 per cent. A Government who are complacent or uncaring about a level of unemployment of over 40 per cent. are a Government who have abdicated their responsibility to govern. A Government who refuse to govern are unworthy of the name of Government.
Yet, despite the 40 per cent. unemployment, NSF, a subsidiary of the National Coal Board, announced in February this year a proposal to close the Fishburn coke works. If implemented, that proposal would push unemployment in the Wingate employment exchange area to over 50 per cent. The coke works is the major employer in Fishburn. It is not ailing. It is a highly efficient plant which produces some of the best domestic coke in the world. It provides work indirectly for many other people in the area, such as road hauliers and dockers.
In case anyone is unmoved by the loss of jobs, I can add that even in economic terms the closure is questionable. We are told that the recession is ending. I entirely agree with the hon. Member for Loughborough (Mr. Dorrell) that we need a broad-based economic recovery. My constituents are not interested in promises about economic recovery; they are interested in performance. In the recession, NSF loses money. However, the direct cost of closure in terms of redundancy payments, lost taxes and other related costs amounts to £3 million in the first year and £1 million in the following years. To close Fishburn is an act of economic madness multiplied by social disregard on an unbelievable scale. Its only true justification is a blind allegiance to dogma.
Fishburn is significant not just in itself but as an example of the peril facing the north-east — a peril exemplified in the Bill. Fishburn is a real community. The constituency of Sedgefield is made up of such communities. The local Labour party grows out of, and is part of, local life. That is its strength. That is why my constituents are singularly unimpressed when told that the Labour party is extreme. They see extremism more as an import from outside that is destroying their livelihoods than as a characteristic of the party that is defending those livelihoods.
There is not a pit left in my constituency. In the 1960s and the early 1970s, new industry came to the constituency, but it often lacked strong roots. When the recession began to bite, many companies—particularly the multinationals — saw their northern outlets as the ones to be cut. Some still remain, including Thorns and Black and Decker, although both have suffered cutbacks. Carreras Rothman, also in Spennymoor, is one area of growth, but in general terms the picture is bleak. It should not be so, because any discerning observer can see the advantages that the area offers. There is a capable and willing work force. There are massive amounts of factory space let at low rents by a district council that, unlike central Government, is eager to assist economic growth. There is ready access by road, rail and air, and some of the most beautiful countryside in Britain.
What Sedgefield and the north-east desperately need is a Government committed to marrying together the resources of the area—a Government committed to the north. Over the last few years the level of investment in manufacturing industry in the north has dropped not merely in absolute terms but relative to other parts of the country. That situation must be reversed. In practical terms, the Government must pledge themselves to a massive investment in the region and must plan that investment.
I and others will continue to press for a northern development agency to perform for the north the task that the Scottish Development Agency performs for Scotland. That is not a request for fresh bureaucracy but a realistic assessment of need. Experience of the present Government may teach caution in hoping for such a commitment, but a refusal does not make the case for such a body any less strong. The aim would be to harness the considerable resources of the constituency and the region and to let them work to create a better standard of living for the people. After all, that is the essence of Socialism.
I am a Socialist not through reading a textbook that has caught my intellectual fancy, nor through unthinking tradition, but because I believe that, at its best, Socialism corresponds most closely to an existence that is both rational and moral. It stands for co-operation, not confrontation; for fellowship, not fear. It stands for equality, not because it wants people to be the same but because only through equality in our economic circumstances can our individuality develop properly. British democracy rests ultimately on the shared perception by all the people that they participate in the benefits of the common weal. This Bill, with its celebration of inequality, is destructive of that perception. It is because of a fear that the Government seem indifferent to such considerations that I and my colleagues oppose the Bill and will continue to oppose it.

Mr. David Evennett: It is an honour and privilege for me, Mr. Speaker, to make my maiden speech on the important subject of finance. The Second Reading of any Bill is important, but the Second Reading of the Finance Bill is even more so.
I should like to compliment the hon. Member for Sedgefield (Mr. Blair) on his excellent, interesting and controversial maiden speech. I look forward to opposing him in debate during this Parliament. I am sure that, like


me, he was somewhat apprehensive on this memorable occasion, but he coped magnificently. I shall try to do the same.
Having graduated in economics from the London School of Economics, I am deeply interested in the subject and in the management of the economy. We are all aware that financial measures enacted here affect the life of every citizen in one way or another. However, we must never forget that our economy depends heavily on the health of the world economy and cannot be dealt with in isolation. I am personally concerned about several key economic factors — the level of unemployment, the level of investment in British industry, Britain's export performance and, of course, the level of Government expenditure.
If we have learned anything in the last few years it must be that spending more will not by itself solve Britain's economic problems. The levels of Government expenditure and borrowing were major issues in the recent election campaign. The electorate were offered widely differing financial and economic policies. They made their choice and because of that choice I am privileged to be here representing the people of Erith and Crayford.
For the benefit of hon. Members who are not aware, may I say that until 9 June Erith and Crayford, which formed part of the London borough of Bexley, had not been represented by a Conservative Member for the best part of a lifetime. The last Conservative elected for the constituency was in 1935. I am therefore in the unique position of being the first non-Socialist elected to serve Erith and Crayford since the war.
I pay tribute to my predecessor, Mr. James Wellbeloved, for his 18 years of service in Parliament. He was undoubtedly a hardworking and capable hon. Member who gave tremendous service to the House and his constituents. Although elected as a Socialist, including in the 1979 election, he repented of his Socialist views in the last two years of his representation of the constituency. I wish to place on record my good wishes to him in his retirement from the active political scene.
I shall endeavour to continue the good constituency work of my predecessor and emulate his long term in the House. I do not of course share his political views, not even those he acquired after seeing the light in 1981. I shall be putting my weight and voice behind the private enterprise approach to the financial and economic problems of the nation and my constituency.
Erith and Crayford, in common with the majority of parliamentary constituencies, was subject to a considerable boundary change. Two wards in the previous constituency of Erith and Crayford — Barnehurst and Barnehurst, North—were transferred to the neighbouring Bexleyheath constituency and aided my good friend, the hon. Member for Bexleyheath (Mr. Townsend), to be returned with an even larger majority. We were delighted with his result.
The present Erith and Crayford constituency is fortunate in having several natural advantages which, together with realistic Government economic policies and the utilisation of those advantages, could transform this part of Greater London into a thriving and prosperous community. I shall do all I can to help to achieve that goal.
For investors, Erith and Crayford has many advantages. It has a good location, being close to London, and a large local market. It is situated on the River Thames and has good road and rail links with all parts of London, the home

counties and the southern ports. It has a considerable, varied and talented work force. The people of the area possess a wide variety of skills and the local population comprise young and old, skilled and unskilled, office and factory workers. The people of Erith and Crayford are good, hard-working and able, ready to rise to new challenges and to take on the jobs of tomorrow.
There is also in the constituency considerable available space. That includes space for new housing developments, new investment in factories and even the exciting possibility of reclaiming and developing local marshland. The old industries have died but the derelict sites left behind could be utilised by the industries of the future.
We are also unfortunate in being part of the London borough of Bexley, which has a reputation for efficient and effective local government. Not for Bexley borough the vast rate increases or the extravagant and wasteful expenditure of some local councils. Not for Bexley the destruction of jobs because of vast rate bills.
The people of my area welcome the Government's commitment to abolish the Greater London Council. The only message from my constituents is, "Please make it sooner. Do not delay. Do it quickly, before any more damage is done to our part of the world." We cannot afford to delay in implementing this policy. We must do it now. My constituents also welcome the Government's determination to legislate to curb spendthrift councils which increase rates excessively and destroy local communities by killing industries and cutting jobs.
The problems of Erith and Crayford parallel those of the nation: factory closures, industrial decline, lack of competitiveness, lack of investment in new ventures, high taxes, lower productivity, and an increasing number of jobless and a high level of Government and public expenditure in the past which has milked the wealth of the nation and channelled it into the non-productive, non-wealth creating sectors. But things are definitely changing and in the last few years we have had an Administration who have been determined to reverse those trends.

Mr. Austin Mitchell: Killing manufacturing industry, too.

Mr. Evennett: I applaud the Government's financial policies and the measures contained in the Bill. The only way forward for the nation, especially for constituencies like mine, must centre on the firm control of public expenditure, with a sound money policy and lower public borrowing. This approach is realistic and credible—

Mr. Austin Mitchell: Oh, dear.

Mr. Evennett: —and, despite groans from the Opposition, it was endorsed by the electorate last month. The people want economic and financial realism from the Government, and the results of the financial policies pursued in recent years are beginning to show through. The economic situation is rosier than it has been for a long time, with recovery coming at an accelerating pace. Some confidence is returning to industry and the mood of business men has changed to that of cautious optimism. Order books are getting larger and stocks are being rebuilt, aided by Government policies and a cheaper pound. If recovery is to be sustained, the next move to growth in the economy must come from higher exports and greater private investment.
We hope, now that the election is over and the Conservatives are safely re-elected, that foreign investment will flow into British firms and that there will be more domestic investment in private industry. Hopes for growth in British exports depend to a large extent on a revival in world trade. They also depend heavily on our export competitiveness, so that policies for increased investment and higher exports must remain top Government priorities.
The financial policy as outlined in the Bill is designed to achieve those objectives. Economic recovery will be encouraged and sustained by the measures outlined by the Chief Secretary today. The financial strategy expressed in the Finance Act 1983 was based on a continuation of the policies of the last few years. The Bill is part of that strategy and is designed to promote further progress towards a sound economy. In this quest, the continuation of anti-inflationary policies remains crucial.
The Conservatives have brought public expenditure under control at a realistic level. We have given substantial aid to small businesses, those which will create the wealth of the future, the wealth for our national economy which we so desire. The Government have given tax cuts to people to improve incentive and, contrary to what we heard earlier, such cuts definitely improve incentive.
The Government must reduce the tax burden further because it is far too high in Britain. They have cut taxes on business, which will help to cut costs and increase competitiveness. This is the way to export, this is the way to the future. Most important of all, the Government have rightly ignored those voices urging a tremendous boost to the economy by pumping in more and more public money for possible short-term gain. Such a policy would destroy the financial and economic gains of the past few years. In the long term, such an inflationary public spending spree would not only destroy jobs but put the British economy into irreversible decline.
Everyone would like to spend more money, whether an individual, a Government, or a company. We would all like to spend money on those services in which we personally and passionately believe. When the economy is prosperous and expanding and when wealth is being created, we can do that. When the Government's financial policy has turned the economy round and we can make progress once more, I am sure that we shall be able to spend money in that way, on such desirable projects. Until then, the Government must not deviate from their set course. They have achieved so much so far. We are not at the end of the tunnel but we are well on the way. I welcome the Bill as another stage in the Government's programme for making the country economically and financially prosperous again.

Mr. Ian Wrigglesworth: It is a great pleasure to follow two maiden speeches, from the hon. Member for Sedgefield (Mr. Blair) and the hon. Member for Erith and Crayford (Mr. Evennett). They were two capable and interesting maiden speeches which, I am sure, bode well for our debates. The hon. Member for Sedgefield was articulate and confident. I am sure that he will play a major part in our debates, particularly in defending the interests of the northern region, which he now represents. We followed the mini-election that took

place in Sedgefield during the course of the general election campaign with great interest, watching while the decision was taken about who would represent the Labour party in that seat. We wondered whether it would be Mr. Huckfield or Mr. Weighell. We are pleased that, on the basis of his speech this afternoon, it is the hon. Member who is with us today. We look forward to further contributions from him.
The hon. Member for Erith and Crayford paid tribute to my former colleague, Mr. Wellbeloved, who represented that constituency. I am grateful on behalf of the SDP for his kind words. We shall be looking forward to hearing from him. The hon. Member mentioned that he had been involved in the study of economic affairs, and we look forward to hearing his views. If he can be half as forthright as my former colleague, I am sure that he will make a major impact on this place. We wish him well.

Mr. Robin Cook: He will not defect.

Mr. Wrigglesworth: I want to make some reference to the Bill, but basically I support the criticism made by Opposition Members of its priorities. The Bill certainly illustrates the broad difference of approach between the two sides to economic and fiscal affairs and to industry and the economy. I would not want to challenge what the Chief Secretary said about the Government's consistency in relation to specific measures contained in the Bill. Of course, the Government have been consistent in bringing back to the House proposals they had put to it earlier. However, the Chief Secretary spoke about honouring commitments honourably given. The Government have not been consistent in pursuing some of the points made during the election campaign by the Prime Minister and other members of the Government about unemployment. They have not been consistent in following up manifesto promises.
In the introduction to the Conservative manifesto the Prime Minister said:
The universal problem of our time, and the most intractable, is unemployment … We have a duty to protect the most vulnerable members of our society".
The manifesto stated:
This Government has an impressive record in helping the unemployed who, usually through no fault of their own, are paying the price of these past errors.
The manifesto claimed that it was
through no fault of their own
and that the Government feel compassion for the unemployed, but the first Bill presented to the House does virtually nothing to help the still growing number of people who are living on reduced unemployment benefit as a result of the Government's economic policies. The Bill gives no hope that the commitment to help the unemployed and get people back to work made by Ministers during the course of the election campaign and in debates in the House since we returned will be carried out.
The Government will not succeed in honouring those commitments by presenting Bills of this sort to the House. As hon. Members on both sides have pointed out, priorities are matters of judgment for Ministers and in our view the Government have decided upon the wrong priorities. Out of the total of £460 million in revenue being forgone under the Bill, £390 million is going to people who, under current circumstances, do not need it. When times are as difficult as they are for broad sections of the community, any taxation relief should go to those people


who are the hardest hit. The Government should be pursuing the old principle that those with the broadest backs should bear the greatest burdens.

Mr. Ridley: To get the record straight, the cost of the Bill in 1983–84 is about £150 million. The hon. Gentleman's figures are miles too high.

Mr. Wrigglesworth: If the Financial Secretary looks, he will find that I am giving the figure for the full year.

Mr. Robin Cook: I do not know whether the Financial Secretary was present when the Chief Secretary introduced the Bill. He said distinctly that the cost of the Bill in the current year would be £263 million and in a full year would be £403 million. As we are considering the Bill late in the financial year, it seems perfectly proper for the House to have regard to the full-year cost.

Mr. Wrigglesworth: I am grateful for the intervention by the hon. Member for Livingston (Mr. Cook). I was referring to the full-year cost. I had worked it out from the Red Book published at the time of the Budget. I accept that I may have slightly overestimated the figure given at that time in those tables. I am not referring to the part cost to which the Financial Secretary referred

Mr. Ridley: I was giving the cost for 1983–84, which is when the rates will apply, of the reliefs over indexation. That is what would be necessary if the law were not changed. We would have indexation. That is the increase over indexation.

Mr. Wrigglesworth: The point that the Minister makes does not bear upon the main burden of what I am saying, because the main burden of my argument, and that put forward by other Opposition Members, is that a substantial amount of tax relief is being given—money from the Exchequer has been forgone — not to create jobs, more profitable industry or to help the poorest section of the community which is bearing the greatest burden, but to help substantially those who have the greatest means within our community.
We believe that that is the wrong approach. If the Exchequer can afford some reliefs, and can afford to give up funds in that way, they should be given to the most deserving sections of the community.
I agree with what was said by the hon. Member for Erith and Crayford. If we want to have an industrial recovery and to spend money on social services, education and all the other things that we want to spend money on, tax relief should be given to businesses, particularly small businesses, to stimulate growth and create jobs and wealth. My party and I would have preferred the Government to introduce a much greater extension of the business start-up scheme or of the loan guarantee scheme or a zero rating of VAT on the repairs to commercial premises, which would help to stimulate the construction industry and would help businesses considerably. Already that rate is given to building. It seems nonsense that repairs to commercial enterprises should not be zero rated in the same way.
Those reliefs would give rise to the creation of wealth and jobs. The relief scheme for mortgages on the higher rate band in the Finance Bill is misdirected and will not help growth in the economy or the improvement in employment that everyone in the House wants.
I refer briefly now to the overall pattern of the Government's economic policy. I very much disagree with

remarks made by the hon. Member for Erith and Crayford. The Government's whole philosophy over the past three years, during the election campaign and since, is the idea that it is wicked and immoral to borrow money to get through a difficult period and to stimulate growth That philosophy is nonsense. We need to tackle that argument, which most British people and most families, when they stop to think about it, realise is nonsense. There is not one family which, when it is on hard times, will not borrow —not beyond its means—and there is not one business which, when it sees prospects of growth ahead and can borrow within its means so that it can grow, will not do so. Few Conservative Members who have been involved in business will not, during their business life, have borrowed money to launch their businesses and allow them to grow and prosper, giving rise to greater profits and wealth.
Therefore, it should not be necessary for my colleagues and I and other hon. Members to urge the Government to borrow, not beyond the country's means, but more than they are prepared to at present, and to increase public spending to get the growth in the economy that is now so vital. We are not suggesting and have never suggested that we should throw money around and have a confetti money expansion of the economy. That would give rise to inflation and the brakes would have to be slammed on. It would damage the growth that we seek to achieve. That is not the way ahead. However, now that the Government have a prospect of four or five years in office, one hopes that over that period they will pursue an economic strategy that gives rise to steady growth in the economy and a steady expansion of public expenditure that would not make inflation roar up again but would allow the growth in employment and wealth that everyone wants.
I appeal to Treasury Ministers to stop pursuing the argument that they have a moral crusade to carry out against borrowing. There is no reason why they should not expand public expenditure modestly to bring about the growth that industry after industry is capable of and very much wants. The capacity is there in those industries and in every region. The facilities are there in the service sector of British industry to support growth.
It is a criminal act against the people to keep the economy squeezed down as it is now and not to allow it to expand. I hope that the Government will think again now that they are settling into a new term of office and allow some expansion so that the millions of people who have no prospect of employment, if the present policies are to continue, are given some hope for the future.

Mr. Alan Howarth: I am grateful to you for calling me, Mr. Speaker. In this, my maiden speech, I shall first pay tribute to my predecessor who represented Stratford-on-Avon, Sir Angus Maude. En not one but two generations, Sir Angus was one of the leaders of the intellectual life of the Tory party. After the war he was a founder of the One Nation group and joint author with distinguished Members, past and present, of the pamphlet entitled "One Nation", which is one of the great Conservative texts. In 1975 he became chairman of the Conservative research department, to play once again a critical part, which was entirely consistent with his earlier career, during a major period of philosophical reappraisal and policy development in his party. Having had the privilege of being the director of the Conservative research


department, I regard Sir Angus as one of my principal teachers in politics, and it is therefore a special delight for me to follow him as the Member for Stratford-on-Avon.
Sir Angus's political career offers the encouraging demonstration that someone whose continuing independence and originality of mind have been such as to cause the brows of those on high from time to time to furrow rather deeply can yet make a central contribution to the life of his party and hold high office. At the time of Suez, Sir Angus found himself profoundly at odds with the leadership of his party and had the courage to act on that conviction, yet in the fullness of time he served, like Edmund Burke, as Paymaster General. Although he has now left the House, Sir Angus's political journalism remains required reading. I hope that he will have many platforms from which to instruct and interest us for years to come.
Sir Angus was for 20 years a devoted servant of his constituents in Stratford-on-Avon. The town of Stratford, together with the 120 villages, the farms and countryside of south Warwickshire make up the heart of England. My constituency is not only singularly beautiful but combines depth of national tradition with a great range of modern life. I am fortunate to represent such a constituency, and I shall do my best to do so worthily.
I am fortunate, too, to have the opportunity to make my maiden speech on the Second Reading of the Finance Bill because this occasion is at the heart of parliamentary government. The right of the House of Commons to determine the nature and level of taxation is the key to our constitutional liberties. Fortunately, too, the Finance Bill, in conjunction with the Finance Act earlier this year, marks an alleviation of the burden of taxation, which was earned and justified by the financial discipline of the previous Conservative Government. On 9 June, the British people emphatically expressed their continuing support for policies of realism in our national finances, as in our national defences.
I hope that you will not think it controversial or mere rhetorical indulgence, Mr. Speaker, if, as the hon. Member for Stratford-on-Avon, I quote from Shakespeare, from Henry VI, Part II. The policies put forward by the leader of the Labour party at the general election were no different from the policies of Jack Cade in Henry VI:
There shall be in England, seven halfpenny loaves sold for a penny … all the realm shall be in common … And, when I am king, (as king I will be) … all shall eat and drink on my score; and I will apparel them all in one livery, that they may agree like brothers".
The right hon. Gentleman, who is a literary man, will recognise the quotation.
The Liberal and Social Democratic parties also live in a world of make-believe. It is only the presentation of the alliance parties that has changed; their policies are unreconstructed. They are a latter-day expression of the 1960s notion that by well-meaning Government meddling here, there and everywhere, and always spending just a little more money than we can afford, our problems will be dealt with.
The Conservative party has a different approach and the Finance Bill takes its place as part of the medium-term financial strategy that has achieved a reduction in inflation that the country profoundly values. But inflation, even at

3·7 per cent., means prices doubling in 19 years, and I have no doubt whatever that the country will wish to see the effort maintained to reduce inflation further.
I hope that it will be generally acknowledged that in all parties we are intensely and sincerely concerned to find remedies for the grave problem of unemployment. There are right hon. and hon. Members who still suggest, however, that we should make a choice between policies to deal with inflation and policies to alleviate unemployment. The truth surely is that by destroying the real profitability of firms and eroding their capacity to reinvest, and more generally by undermining business confidence, inflation is the arch destroyer of jobs.
Let us look for a moment at the parallel, and intimately related, upward marches of inflation and unemployment in Britain. Between 1951 and 1964 — they were good years—the average inflation each year was 3·5 per cent. and unemployment on average was 330,000. Between 1964 and 1970, average inflation was 4·75 per cent. and average unemployment 500,000. Between 1970 and 1974, inflation ran at 9·5 per cent. on average and unemployment at 750,000. From 1974 to 1979, inflation ran at 15 per cent. on average and unemployment at 1·25 million. That was our inheritance in 1979, and the further distressing increase in unemployment that has followed has been in large part the consequence of the inflation that had so debilitated our economy over many years.
Possibly in the short term a sharp boost to the economy, which the Opposition parties advocate in varying degrees, would generate a few new jobs, but that reflation would at the same time precipitate inflation. The various devices that it is claimed might prevent that being so — a national economic assessment, incomes policies, statutory, flexible or whatever—are not remotely convincing, and renewed inflation would very quickly destroy not just the few new jobs but very many others too.
The Government are right to keep the defeat of inflation at the centre of their policies. Inflation is the most profoundly divisive and destructive force. Inflation characteristically hits hardest those who are least able to take care of themselves. Notoriously, for example, it destroys the savings of pensioners. By provoking aggressive pay demands, inflation sets people against one another — workers against management, unionised workers against non-unionised workers, the employed against the unemployed, the working generations against the school leaver and the pensioner generations.
Money, after language, is our most basic means of exchange. When people can no longer trust something as fundamental as money, they become insecure, and insecurity breeds aggression. It was when prices had doubled in five years that we reached the winter of discontent and the brink of social disintegration. As we hauled ourselves back from that abyss, we resolved as a country that we must conquer inflation.
Inflation is fairly and squarely the responsibility of Governments. Inflation sets in when Governments contract the habit of spending more than they dare raise in taxes. Once they are any distance down that road, Governments resort to monetising their debts and inflating their way out of burdens that otherwise become insupportable.
Therefore, it is my hope that, as he unfolds the medium term financial strategy beyond its present horizon, my right hon. Friend the Chancellor of the Exchequer will in due course bring us to a balanced Budget. By balancing


the Budget I mean that the Government should progressively reduce their financial deficit to the point that public expenditure—other than capital investment by the nationalised industries — is fully matched by taxation over the course of the business cycle.
The benefits of a balanced Budget would be very great. It would be a better beacon to financial markets and wage bargainers than the obscurities of the medium term financial strategy. It would make good sense politically, reinforcing the themes of honest money and good housekeeping. A commitment to a balanced Budget would be the safest guarantee against inflation.
Our objective has to be zero inflation. It is perfectly feasible to achieve broadly static prices in Britain, and we should see zero inflation not as a zero option but as a necessity. There will, of course, be all the familiar difficulties in the way of reaching that highly desirable state of affairs. The recent money supply figures and the expected rise in prices over the corning year vividly illustrate both the difficulty of the task and its necessity.
Public expenditure will never be easy to control, although round after round of belt tightening or reductions in social security benefits — if such were to be contemplated—are not the most imaginative approach to public expenditure. Why should we not look more positively at ways to encourage people to opt away from dependence on public provision? As it is, Government Departments seem to have embarked on a spree at the end of the last financial year, and the newspapers are thick with the usual seasonal rumours that spending Departments will be trying to extract an extra £5 billion out of the Exchequer in the coming year. There is a pressing need for the local authorities, as well as the nationalised industries, to spend more on capital investment.
More worryingly, the recovery in the United States' economy, while vigorous at the moment, is of doubtful staying power. The combination of monetary relaxation since last summer, and the failure of the Administration and the Congress between them to grapple effectively with excessive public expenditure, could well result in a return to stagflation. If the American recovery is abortive, prospects for growth in our own economy, and for buoyant tax revenues to float us off some of the more awkward public expenditure rocks, will deteriorate.
Dwarfing even those problems is the gigantic problem of world debt. There is a fairly persuasive view that sustained growth in the OECD countries in the 1980s of about 3 per cent. a year will be necessary to avert financial catastrophe precipitated by major default. The pressure to achieve such growth may drive other OECD countries—as it has already driven the United States of America—to take large risks in an inflationary direction. Therefore, I draw encouragement from the commitment in the Queen's Speech to our Government promoting international recovery on a non-inflationary basis.
We have become so punch-drunk with the inflationary experience of the 1970s that it seems to many people too good to be true that there should be non-inflationary growth. Admittedly, non-inflationary growth presupposes a degree of self-discipline that democracies since the war have not found it easy to muster, but non-inflationary growth was the normal pattern for hundreds of years between the development of modern capitalism and the moment in the 20th century when politicians got hold of the idea that deficit financing could be a short cut to a good society.
The dynamics of non-inflationary growth are human aspiration and the profit motive, the improvement of markets, and the growth of productive capacity—capital accumulation, technical innovation, education and training, and productivity. The task of Government is to clear away the obstacles to growth, not to inject inflationary boosts to demand. It is open to us, if we will, to return to non-inflationary growth and the enlargement of social possibilities that goes with it. In the meantime, the provisions of the new Finance Bill are a valid component of the financial strategy that will lead us in the right direction.

Mr. David Lambie: I congratulate the hon. Member for Stratford-on-Avon (Mr. Howarth) on a thoughtful speech, which well becomes a former member of the Conservative party research department, who follows in the traditions of his famous predecessor, Sir Angus Maude. We shall listen to him often on similar themes, because we know from experience that he comes from an area that always sends Conservative Members to the House.
Representing a constituency in which one man in three is unemployed, I look upon Stratford-on-Avon as a heaven on earth where there are no problems, beautiful scenery and long traditions of culture, and where the only difficulty is how to spend one's money and live well. I hope that the hon. Member for Stratford-on-Avon, as well as reading and quoting Shakespeare, will read the person whom we in Scotland always quote—especially those of us from Ayrshire—Robert Burns. If he does so, he will realise that those of us who represent Scottish constituencies are more worried about man's inhumanity to man than about the pomp and circumstance of Shakespeare and all that he stands for. However, I congratulate the hon. Member and hope to listen to him often in the House.
My speech will be about one of the items that has been omitted from this Finance Bill, but which we were told would be inserted in the previous Finance Bill. In the Budget statement earlier this year the then Chancellor of the Exchequer said:
On 3 March I informed the House about the publication of the report of the working party on free ports, under the chairmanship of my hon. Friend the Economic Secretary to the Treasury. I can now tell the House that the Government accept the report and will implement its recommendations. Legislation will therefore be introduced in the Finance Bill to enable selected free port sites to be designated."—[Official Report, 15 March 1983; Vol. 39, c. 154.]
Unfortunately, when the Finance Bill appeared it did not contain a free port clause, but we were informed that the Government intended to introduce an amendment in Committee.
I was disappointed today, when listening to the Financial Secretary, to hear no mention of the Government's intention to introduce an amendment in this Finance Bill, as promised on the previous Bill. dealing with the principle of free ports. In answer to a question from the hon. Member for Banff and Buchan (Mr. McQuarrie), the Minister of State, Treasury said:
The Government remain committed to the establishment of free ports in the United Kingdom on an experimental basis. Guidelines will be issued shortly setting out the criteria by which applications for free port designation will be judged. All bids received will be fully and carefully considered." — [Official Report, 27 June 1983; Vol. 44, c. 32.]


The recent press statement listing the items that will not be in the Bill simply included free ports without comment. Various lobby correspondents have suggested that a provision will be included in the Finance Bill that follows the Budget in the spring of next year. That delay will cause great concern to those hon. Members who, in the previous Parliament, campaigned actively for the principle of free ports.
I was Chairman of the Select Committee on Scottish Affairs in the previous Parliament and we inquired into the future of Prestwick airport and came out with a unanimous decision that the future of the airport could be safeguarded by introducing a free port on the land owned by the British Airports Authority and Kyle and Carrick district council. We sent a report to the Secretary of State for Scotland who accepted its principal recommendation on free ports. That is understandable because he is also the right hon. Member for Ayr and the airport at Prestwick is in his constituency.
We also sent a copy of the report to the Department of Trade and convinced Ministers there that they should accept the principle of free ports and campaign against the Treasury opposition to that principle. Lord Cockfield was the Secretary of State for Trade and Mr. lain Sproat, a former colleague in the House, was the Under-Secretary with special responsibility for the future of airports in the United Kingdom. Thanks to pressure by Lord Cockfield and lain Sproat against the opposition of the Treasury, the Government set up a working party under the chairmanship of Mr. Jock Bruce-Gardyne, who unfortunately is no longer in the House. Although he was the chairman of the working party, he told me—I am sure that he will not object to my saying this—that free ports would be introduced into the United Kingdom over his dead body. That must have been his political dead body as he is no longer here. In spite of his statement, the working party came out with a unanimous report in favour of the principle of free ports, and that was accepted by the Government.
I have been an hon. Member for some time and I have seen parties move from the Opposition to the Government side of the House and back. I have seen Treasury Ministers and Chancellors of the Exchequer move from the Government Front Bench to the Opposition Front Bench. but I sometimes wonder whether it makes any difference which party sits on which side of the House, and which Chancellor sits on the Treasury Bench. At the end of the day, the longer one remains an hon. Member the more one realises that the only people who consistently win are the mandarins at the Treasury.
When the Select Committee on Scottish Affairs carried out its inquiry into Prestwick airport, the first paper we received was "Portcullis", the departmental paper of the Customs and Excise. It had a big leading article, which reminded me of The Sun newspaper, with a headline about four inches deep saying that free ports were a non-starter. That was before we started our investigation. The Customs and Excise view was that free ports were not on.

Mr. Bill Walker: I hope that the hon. Gentleman will agree that that did not deter the Committee, but gave the Committee the incentive to finish the job.

Mr. Lambie: I accept that. One thing about Scots is that, although we might fight among ourselves, whenever

we see an enemy on the horizon we unite against that enemy. All the members of the Select Committee, whether Tory or Labour, realised that our enemy was the Customs and Excise and the Treasury.
I am proud to say that, despite that headline, we won the battle and the Treasury "non-starter" took off. We congratulated ourselves on the fact that we had managed to defeat the mandarins at the Treasury. However, we forgot that, although we had won that battle, we could still lose the war. We won the battle and the Chancellor committed himself to the principle of free ports. We waited for the publication of the criteria that the various areas bidding for the free port status would have to satisfy, and waited also to be told this month that Prestwick airport and various other places were to be designated as free ports.
Unfortunately, we had the general election. We still have the same Government in power, but they seem to have departed from the principle of free ports. If that is not correct, I should like a statement to the contrary in the winding-up speech. I also want an assurance that an amendment will be made to this Finance Bill, as was promised for the previous Finance Bill, giving us the right to set up free ports in the United Kingdom.

Mr. Albert McQuarrie: I was also a member of the Select Committee that discussed this important issue. The lack of a Government commitment to free ports is doing irreparable damage to certain areas. That affects not only Prestwick, but Aberdeen, which has one of the three airports designated by the former Under-Secretary, Mr. lain Sproat. Unless the Bill is amended as suggested, certain areas will suffer severe unemployment problems.

Mr. Lambie: I accept that. If we do not get an assurance from the Minister, I hope that the hon. Gentleman will use his traditional independence and vote with us against the Bill's Second Reading. Most members of the Select Committee on Scottish Affairs believe that if the Bill is not amended the mandarins at the Treasury will win and that by the time that next year's Budget is introduced we shall be back to square one and the principle will be lost.
I hope that we shall have an assurance from the Government, because it will make a tremendous difference to plans for the future of Prestwick airport. I speak on behalf of all hon. Members representing Ayrshire constituencies when I say that the unemployment rate in the area is one of the highest in the United Kingdom. In my constituency every third male is unemployed. Despite what we have heard from maiden speakers representing the rich areas of the south-east of England, I hear nothing from factories in my area but reports of ever more redundancies and closures.
Ayrshire needs a shot in the arm. It needs an impulse to get the economy going again. The only way to achieve that within the Government's economic policies is to establish free ports, not only at Prestwick, but in any area that can justify its case to the Government. I hope that we shall have the necessary assurances.

Mr. John Townend: I add my tribute to my hon. Friend the Member for Erith and Crayford (Mr.


Evennett) who made a robust and optimistic maiden speech. I am sure that we shall hear many contributions from him in future.
I also congratulate my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) who made a lucid and thoughtful speech and impressed the House. My hon. Friends appreciated his kind remarks about Sir Angus Maude who was much loved. It is clear from the calibre of my hon. Friend's contribution that he will be a worthy successor to that great parliamentarian. We look forward to further thoughtful and robust contributions.
Like my hon. Friend the Member for Loughborough (Mr. Dorrell), I speak for the first time as the representative of a reorganised constituency. The market town of Driffield and surrounding villages are now part of my constituency. Driffield is known as the capital of the Yorkshire wolds. It is a delightful town with friendly people. It is prosperous and contains a number of successful local and family-controlled companies.
I am sorry that the hon. Member for Stockton, South (Mr. Wrigglesworth) has left the Chamber, because I want to refer to his speech. When advocating increases in capital expenditure the hon. Gentleman said that, as business men, we should compare borrowing for our businesses with state borrowing for capital expenditure. There is a distinct difference between the two. When borrowing for our businesses, we borrow for a return on the capital invested. It is dangerous to think that revenue expenditure should be restricted and that capital expenditure by Government is automatically good. In many examples of large-scale capital expenditure in the last few years the public have not had an adequate return. I think of the millions of pounds poured into De Lorean; the building of the Humber bridge, the deficit of which approaches £150 million; the building of Concorde; the investment in steel plants to produce steel for which there will never he a market; the investment in the Bedford-St. Pancras line, where several million pounds of stock remained idle for many months because of restrictive practices by the unions.

Mr. Campbell-Savours: Which capital projects in his constituency would the hon. Gentleman like to have cut?

Mr. Townend: There are no large-scale public sector capital projects in my constituency, but with a number of my colleagues I am opposing a large-scale capital project by the Humberside county council costing £5·5 million —an ice rink for Hull which will be paid for not by the ratepayers of Hull but by the ratepayers in the rest of Humberside.
The hon. Member for Colne Valley (Mr. Wainwright) said that if one has to pay tax on interest received it is just and equitable that tax relief should be available on all interest paid. I agree with him 100 per cent. The hon. Gentleman is a chartered accountant, and I am a member of the same profession. All chartered accountants accept that view. It was the law up to 20 years ago, but the law was changed by a Labour Government and it would be interesting to know how the Liberals voted at that time. The hon. Gentleman made a relevant point which I commend to my Front Bench.
In general I welcome the Bill, but I am a little disappointed that it does not deal with the taxation of holiday flats. That problem is important in my constituency and to all holiday or tourist resorts. The

problem arises because in the last year or 18 months in certain parts of the country the Inland Revenue has changed from taxing that income under schedule D, case 1, as a trade to taxing it under schedule D, case 6, as investment income. That means that some holiday fiat investors are subject to investment income surcharge. More important, owners have not been able to claim capital gains retirement relief and relief for the replacement of business assets.
My hon. and learned Friend the Member for Fylde (Sir E. Gardner) endeavoured to put that right when he tabled a new clause to the Finance Bill which was abridged because of the general election. My learned Friend withdrew the new clause after undertakings from the Financial Secretary, who said:
We have decided, as a result of the strong and persuasive representations by my hon. Friends, to change the law in the way that they want. At a suitable opportunity we intend to bring forward proposals to change the law so that those carrying on a business of furnished holiday lettings will, in general, be able to claim capital gains tax retirement relief and relief on replacement of business assets, and to have their income from such a business treated as earned income, whether or not they are carrying on a trade.
I regret that it is not possible to bring the new clause into effect in the Bill, but the Committee will know the reason why that is so. The Bill's life is not likely to be as long as it should be before it becomes an Act, when the necessary complicated, technical drafting could be done."—[Official Report, 11 May 1983; Vol. 42, c. 841.]
I should have thought that the Bill provided a suitable opportunity for the Government to honour that commitment, but I am told that the Treasury draftsmen have not had sufficient time to deal with the matter. I have a sneaking feeling that the Inland Revenue is putting up a strong fight to prevent such a clause becoming law. However, I accept the Minister's point that one reason for not including such a clause was that the Government did not want Parliament to sit through August. If that is the case, I am prepared to accept it. However, I hope that my right hon. Friend, when he replies, will give a firm commitment to include such a clause in the Finance Act 1984 and that the operator's income for the current year will not be affected.
I welcome the Bill, which would not have been necessary were it not for the Opposition's vindictiveness in not allowing certain clauses in the previous Bill to go through. In particular, I was surprised at their refusal to accept the lifting of the tax limit on mortgage relief to £30,000. It showed once more the Labour party's innate opposition to the expansion of home ownership.

Mr. Austin Mitchell: Rubbish.

Mr. Townend: The hon. Gentleman said on television that one reason why the Labour party had gone into decline was that it had missed the boat on home ownership and allowed the Tories to steal its clothes.

Mr. Mitchell: I did not say that.

Mr. Townend: The Opposition also refused to allow the lifting of the band for higher rates of tax which affects middle and upper middle management in industry on whom our future industrial recovery so much depends. That was particularly resented in a year when the same people were for the first time having to pay tax on the petrol they use in their cars. That was felt strongly and was mentioned on numerous occasions during the election campaign.
In their first Budget after the 1979 electoral victory the Government showed great courage in dealing with the problem of excessive taxation at higher levels where the British were taxed at a higher rate than anywhere else in the world—75 per cent. on earnings and no less than 98 per cent. on unearned income.

Mr. Winnick: Is there not some inconsistency in what the hon. Gentleman is saying, bearing in mind his ceaseless campaigning against the wages councils, obviously with the intention of reducing the income of those on the lowest possible wage? I would use a word other than "inconsistency" were I allowed to do so. Does the hon. Gentleman agree that if the Government decided not to increase unemployment benefit to return it to its real value he would not go into the Lobby against that decision?

Mr. Townend: I see no inconsistency at all. Taxation at 98 per cent. is tantamount to confiscation, driving capital and people out of the country. I am advocating the ending of wages councils in order to create jobs. They are reducing jobs, particularly those for young people.
I had hoped that after the Government were returned to office, with an even greater majority, their first Finance Bill would be as courageous as that after 1979 and bring in some radical reforms and simplifications in taxes. In particular, I looked forward to seeing the abolition of the investment income surcharge, because that would be an important move towards simplification. I have never understood the principle behind that tax. I could never see any justification in taxing the income from savings at a higher rate than earnings. As there is no logical reason for it, it has resulted in much discrimination and many problems and anomalies, not least of which is the nonsense whereby, if a man and wife have a reasonable investment income, they can save tax by having a divorce and then living together. It also works against people who decide that they want to invest privately for their old age in the Stock Exchange as opposed to a pension scheme.
Landowners who let their land to tenant farmers are adversely affected compared with those who farm the land themselves. That is one of the most important reasons for the drying up of farm tenancies for young farmers. Indeed, many people in private business avoid paying the investment income surcharge altogether by paying excessive directors' fees or salaries. On occasions, that adversely affects minority shareholders whose only income from such companies is from dividends.
I understand that the yield from this tax is only about £250 million a year. I could spend half an hour suggesting where that money could come from, which might please the Whips, but I am sure that it would not please you, Mr. Deputy Speaker. In the context of our total budget, it is a small amount. Despite their large majority, the Government have not seen a way to include it in the Bill, but it would provide an important step in the simplification of our tax structure and reduce many anomalies to which people object so strongly. Therefore, I ask my right hon. Friend to press the Chancellor to include this in the next Finance Bill.
It is pleasant to speak in support of a Bill with which one agrees 100 per cent. That may be because it is a short Bill, but it provides many benefits in many ways and I commend it to the House.

Dr. Jeremy Bray: This has been a particularly interesting Second Reading debate because of the many maiden speeches that have added a new dimension. I made my maiden speech on a Finance Bill on Report, of all things. The great advantage is that an hon. Member receives far more attention from the Front Bench than he would in a more popular debate.
We heard a distinguished speech from my hon. Friend the Member for Sedgefield (Mr. Blair) who I am sure will add greatly to the advocacy on behalf of a part of the world where I used to represent a neighbouring constituency.
We also had a thoughtful speech from the hon. Member for Stratford-on-Avon (Mr. Howarth) who I hope will contribute not only to debates in the House but to work in Committee. Perhaps he will look rather more closely at what he said. He advocated a balanced Budget excluding capital expenditure at a zero rate of inflation. To achieve the equivalent in the present Budget would require the Government to reflate by about £5 billion. I am entirely in favour of the Government doing that.
I welcome the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) to the House. It is nice to have a Scot on the Conservative Benches who ventures into the deep waters of the Finance Bill and swims confidently. I hope that the hon. Gentleman will continue his advocacy of increasing the threshold for mortgage interest relief but dispensing with relief on higher rates of tax. I am not sure that he will find much support for that from his hon. Friends but I wish him every success. I think that my hon. Friend the Member for Birkenhead (Mr. Field) was more to the point in wanting to abolish mortgage interest relief altogether, but I am sure that he would trade that in for an increase in housing benefit, paid irrespective of whether the recipient is a council house tenant, a private tenant or an owner-occupier.
The Bill is usefully concentrated on higher rates of tax and mortgage interest relief, points on which, because of their origin, the greatest difference exists between the two sides of the House. That difference has been clearly brought out in the debate. The problem with our tax system is that we pay too high a rate of tax at the bottom end. The initial rate of tax is effectively 39 per cent. No other comparable country has an initial rate of tax at anything like that level. In France the figure is 11 per cent. and in Germany it is 18 per cent. — those rates starting at a much higher threshold than in this country. So, when Conservative Members march up and down the country telling people that tax rates are too high, of course they get a tremendous response from low earners.
The other gross anomaly in our tax system is the upper earnings limit on national insurance contributions. For that to be pitched at no more than about twice average earnings and thereafter to disappear altogether means that, as earnings rise through that level, one experiences a no doubt welcome but anomalous cut in one's marginal rate of tax. At the lower earnings limit on national insurance contributions the marginal rate of tax not only increases by 9 per cent. but one has to pay a lump sum because the tax is levied on the whole income starting at zero and not just on income above the threshold. In fact the marginal rate of income tax and national insurance contributions falls as one goes through that lower limit. That produces anomalous effects throughout the tax structure.
The position is different for higher rates of tax on higher incomes. The top rate of tax at 60 per cent. is below that of France, where it is 66 per cent., and only a little above that of Germany. In the United States varies, depending upon which state one lives in, but it is about comparable with the United Kingdom. Conservative Members say we are too heavily taxed. That is not true for those on the highest incomes but it is true for those on the lowest incomes.

Mr. John Townend: Does the hon. Gentleman agree that, before the 1979 Budget, those on medium and upper incomes were too heavily taxed compared with their counterparts in countries that arc our industrial competitors?

Dr. Bray: I shall come to that point later when I deal with what the tax structure should look like if we are to remove the anomalies to which I have referred.
The curve of the average tax rate against income at the highest levels is more or less comparable with the United States, France and Germany but at the lowest levels of income there is a tremendous hump. This hump, starting at the lowest taxable incomes of around £50 a week and continuing at well above twice the average rate of tax of other countries — to about £150 a week — is a gross anomaly with which we must deal. The extreme case—I accept it is the extreme case — in the hump in the average rates of tax at the lower levels is the poverty trap. A married man with two children who earns between £50 and £90 a week, taking into account all the benefits, many of which are means-tested — benefits in kind, such as school meals as well as cash benefits—loses virtually all increases of his income in tax. I refer hon. Members to the tables in the recent report of the Treasury and Civil Service Committee on the structure of personal income tax and income support.
As the problem concerns not just the poverty trap, with people paying marginal rates of tax of about 100 per cent., but those who pay marginal rates of tax of 50 per cent. and above who are still on low incomes, we must consider quite fundamental changes in the tax structure. This Bill is addressed to only 3 per cent. of taxpayers who pay tax above the standard rate. It does nothing for the 97 per cent. of taxpayers who are the bulk of the population. The Bill has reduced from 4 per cent. to 3 per cent. the number of people on higher rates of tax. The Bill deals with only a tiny minority of the population.
By reducing the rate of tax at the top end of the scale, one effectively increases the rate of tax at the bottom end. Any Chancellor must design his tax structure to produce the required tax yield. The Bill further skews the distribution of income tax so that the great majority of people end up paying higher rates of tax. [Interruption.] If Conservative Members disagree with me I hope that they will rise to correct me. The Select Committee report spells this out in great detail.
The tax system is really a see-saw, but it is a great deal more complicated than a two-dimensional see-saw. The tax system is a multidimensional creature because it deals not only with levels of income but with family, age, employment or non-employment, earned income and unearned income. The combination of these different considerations makes tax reform such a complicated problem.
The Sub-Committee of the Treasury and Civil Service Committee, under the chairmanship of my hon. Friend the

Member for Oldham, West (Mr. Meacher), did an outstanding job in producing a report that was built on a vast amount of evidence from the Treasury, the Inland Revenue and the Department of Health and Social Security. The purpose of the report was to ascertain what changes in the levels of taxation, allowances and rate bands would be needed to correct some of the anomalies, while accepting the discipline of the same tax yields at the end of the day. To constrain the complexity of the problem, the present structure of social security benefits was similarly accepted. Within these constraints the Sub-Committee produced a number of combinations and considered four in detail. It considered the impact of these measures on a large statistical sample of actual Taxpayers and not just on the basis of sample cases such as the married man with two children.
Taxpayers are not neatly packaged concepts. There are combinations of age, income and family status, which are uneven. For example, not many people claiming age relief have four children. Not many taxpayers on high levels of income have a large number of children. The combinations in which the large numbers of taxpayers fall should be the principal preoccupation of the Chancellor of the Exchequer and the Treasury in making a Budget, but it seems that they do not adopt that approach. In the tables which appear at the back of the press releases and the accompanying Budget statements, we never see set out the impact of the Government's proposals in terms of the number of taxpayers affected by them. It is never stated that 10 per cent. of the population will gain and that 90 per cent. will lose or that one particular combination will benefit a tiny proportion of the population and damage a large proportion.
The Sub-Committee came to some interesting and significant conclusions in examining the impact of the present tax structure on a statistical sample of taxpayers, and considering possible changes in the structure. More's the pity that the end of the Parliament prevented proper consideration of the recommendations. I hope that a Sub-Committee will return to the task in this Parliament and that the Government will study closely the arguments that are produced. In the circumstances, the Sub-Committee's consideration of these issues was considerably mangled in Committee. That comment can be applied to the tax distribution that Conservative Members would like, as well as to that which Labour Members would prefer.
It is not the 3 per cent. of the population who are affected by clause 1 who matter. It is not the higher rate taxpayers who really matter. We should be concerned primarily with the 97 per cent. of taxpayers who pay the lower levels of tax and who go straight on to the standard rate as soon as they start paying income tax.
The package considered by the Sub-Committee which highlighted the problem most sharply was the one which integrated national insurance contributions and the income tax system. The anomalies lie in the different thresholds. Once someone starts paying the contributions, his payments are based on the whole of his income, because there are no allowances. However, he will stop, in effect, at a relatively low ceiling of only one and a half or two times average earnings. It would be logical wholly to integrate national insurance contributions with the income tax structure.
The second assumption — it is one to which the House will have to give a great deal more attention—is the justification for the married man's allowance I invite



hon. Members to read the argument in detail. I merely say that it seems that the most sensible course would be to abolish the allowance and to increase child benefit. If we abolish the allowance and increase child benefit to £20 a week, there will be a major impact on the types of family and the stages in life that constitute the greatest need for tax relief and produce the greatest social problems.
The Sub-Committee felt that there was a need to introduce a graduated system of tax so that people would not be faced immediately with a marginal rate of 39 per cent. They could come in, for example, at 15 per cent.
If we are to produce the same tax yield by means of this package—I think that many Conservative Members will consider that reasonable in terms of its objectives—it will be necessary to levy the highest rate of 60 per cent. on those who are in receipt of over one and a quarter times average earnings. That would produce a tax structure that would be a great deal more just than the present one.
The direction in which the injustice is most starkly visible is the high initial rate of tax which hammers those on the average and lower rates of income. The second direction is the treatment of children compared with the treatment of the childless couple. Also to be considered is whether the married man's allowance should be based on an assumption that the typical family is the man and non-earning wife or whether the individual should be regarded as the basic unit, which would lead to men and women being taxed on an equal basis. Provision for the family would be made through the much increased allowances for the children.
I was not a member of the Sub-Committee that considered these matters but I applaud its work. I recognise that my hon. Friend the Member for Great Grimsby (Mr. Mitchell) was an active and fertile member of the Sub-Committee, which was under the chairmanship of my hon. Friend the Member for Oldham, West. However, I consider that the restructuring they proposed of income tax and the national insurance system points the way ahead. We shall not get anywhere merely by fiddling around with tax rates and allowances within the present system. Equally, we shall not solve the problem by thinking that we can abolish income tax or greatly change the total amount of revenue that we need to raise from income tax. I hope that the opportunity will be taken in Committee to examine these issues in rather more detail and to direct ourselves to a fundamental restructuring of the tax system.

Mr. David Heathcoat-Amory: It is an honour to address the House for the first time on behalf of my constituents. The new constituency boundaries take in parts of four old constituencies. By far the largest part of the constituency was previously represented by my hon. Friend the Member for Somerton and Frome (Mr. Boscawen). I inherit from him a tradition of great service to the constituency. He has also shown great personal kindness to me, and I thank him for that. As he now represents the constituency next door, he is not lost to me. As he is my area Whip, I doubt whether I shall be lost to him.
My constituency is an area of unparalleled natural beauty, from the Somerset levels, which are below sea level, to the Mendip hills with heights of 1,000 feet and

more. It is an area steeped in the legends of King Arthur and the knights of the round table. They seem to have been the first visitors to come and stay. Today, their place is taken by the many thousands of visitors who come to Wells and to other resorts such as Glastonbury, Burnham on Sea and Cheddar Gorge. Tourists create traffic problems, but they are very welcome and tourism is an indispensable element in the local economy.
Our first industry is agriculture. I hope during this Parliament to play a part in making more tenancies available to young farmers. As with any industry, the long-term health of agriculture depends on the quality of its new recruits. New tenancies are required so that farming can maintain its enviable record of innovation and success. That conflicts, of course, with the desire of farm tenants for security. I believe, however, that the two interests—security and change—can be reconciled to give tenants reasonable security, but not perpetual rights. I am glad that legislation is planned for later this year. Its passage will be keenly watched by many farmers and aspiring farmers in my constituency.
My constituency has other important industries —some traditional, such as shoes, leather and cider-making, and some new, such as electronics and computer science. It is perhaps a sign of things to come that Wells has these important industries without the traditional marks of industrialisation. All are reacting to the challenge of world trade in the only way possible—by modernising plant, reforming work practices and ensuring that high-quality British design is not let down by high production costs.
I have noticed a tendency in the House and, indeed, in this debate to concentrate on overall figures and economic totals, but the real economy consists of individual companies and partnerships. That is where the real battles are to be won on cost, quality, reliability and productivity. What can the Government do to help? They can help by keeping inflation and taxes down. That is an indispensable element in any sustained recovery, and I welcome the Bill as a valuable contribution in that direction.
The Government have a further role to play. Government and industry are linked in many ways —through public purchasing, regional aid, investment grants and the funding of research and development. Defence expenditure, for instance, has profound industrial consequences. Several firms in my constituency depend heavily on defence contracts and the direction of their development programmes is set mainly by departmental specifications.
Government ownership of industry should certainly be reduced, but even if more nationalised industries pass into the private sector, as I hope that they will, the Government will remain closely involved in the workings of industry. That is in the nature of all modern industrial states. Other countries, including those more successful than ours, recognise that, and work to create a constructive relationship. The industrial activities of Government are co-ordinated in pursuit of certain strategic goals. In particular, they speed up the shift from old industries to new.
The task of identifying those goals and giving form and content to such a policy is, perhaps, not the best subject for a maiden speech. It requires changes in the selection and training of civil servants. It may even require a new breed of commercial civil servant. It requires Government Departments to co-ordinate their activities that affect industry and especially the new technologies. It does not


require more money, which should commend such a policy to my right hon. and hon. Friends. Indeed, making Government aid more selective and specific will save money. Nor has such a policy anything to do with the tired old formula of nationalisation and state control that we still hear from the Opposition. That is the exact opposite of what is required. By meddling in company affairs and failing to achieve any overall sense of direction, such policies have actually retarded industrial change.
I am pleased at the content of the Finance Bill—its tax cuts, its sense of responsibility and its brevity. It is part of a strategy to create conditions for a more sustained recovery in the private sector. In addition, however, I urge that the authority and resources of Government be better directed towards helping our economy to face the industrial challenges of the years ahead.

Mr. D. N. Campbell-Savours: It falls to me to congratulate the hon. Member for Wells (Mr. Heathcoat-Amory) on a notable contribution to the debate. He fulfils well the tradition set by his uncle who was Chancellor of the Exchequer from 1958 to 1960. I am sure that many Conservative Members—perhaps a minority now, but ultimately and inevitably a majority—will join him and express very similar views in the coming years as conditions deteriorate.
I also congratulate my hon. Friend the Member for Sedgefield (Mr. Blair) on his illuminating contribution. Labour Members in the region are proud that he has joined the northern group of Labour Members to which he will undoubtedly make a substantial contribution.
The Bill is very nasty, for just one reason. It further entrenches the social and economic divisions in our society. We have grown used to such legislation in recent years. It is a two-nation Bill, introduced by a two-nation party which believes in division and seeks in every way to perpetuate the deep divisions in society. It comes after a general election campaign which failed to face the issues that should have been put before the British people—the great economic issues of our time. Debate was allowed to concentrate on defence, especially Polaris, which was used by the Conservatives as a side issue to deflect attention from the real issues. In so doing, they managed to destroy what might otherwise have been a campaign based on informed debate. The issues were not discussed. That was the case with capital transfer tax which today, as in the past few years, is being reduced. It divides society and ensures that a small minority are able to enjoy even greater rewards.
Would the Minister care to interpret the intention behind clause 12 before next week's Committee stage? Does it really mean what it appears 1:o mean—that the Government are arranging measures to ensure that some people who live in the Isle of Man but who formerly lived in the United Kingdom will be relieved of a tax liability that would otherwise have been due to .the Government? I hope that the Minister will make a point of answering that question in his winding-up speech.
During the general election campaign, there was no discussion of the tax reliefs for the higher paid that were shelved before the general election but have since been reintroduced. Although the Conservative party mentioned housing policy briefly, there was little debate in our region about the implications of raising mortgage interest relief from £25,000 to £30,000.
As the writ for the by-election at Penrith and The Border was moved today, the debate gives me an opportunity to draw the attention my constituents and the people of Cumbria, especially those in the Penrith and The Border constituency, to the Liberal party's performance on mortgage interest relief. It appears that, although Liberal Members interrupted several speeches during the debate of 30 June, they opposed raising the threshold of mortgage interest relief from £25,000 to £30,000 in the Division Lobbies. They are perfectly entitled to do that—I joined them in the Lobbies—but they are not entitled to go around Penrith and The Border, Cumbria and the rest of the United Kingdom before a general election telling people that the threshold for mortgage interest relief should be raised to £30,000 and, as soon as they are returned to the House, vote against that proposal while maintaining that they are consistent. That issue should be debated openly during the Penrith and The Border by-election.
The Labour party's stance will be clear. We oppose the raising of the threshold and believe that the resources should be spent in other forms of mortgage subsidy and, perhaps, in other areas of housing. The Liberal party must come clean. It must explain why Liberal Members oppose raising the threshold, whereas Liberal candidates support the increase. The electorate in Penrith and The Border will demand consistency from candidates who seek election to the House.
Perhaps one of the main reasons why these issues were not discussed during the election campaign is the fact that only 4 per cent, of the population are affected by them. Conservative Members should equip themselves to deal with the accusation that their constituents will level at them — that they have stuck out to protect only the better-off minority. Moreover, we must ask ourelves how it is possible for a Chancellor to present a Bill which affects so few people when 96 per cent. of the population will suffer from the reduced public expenditure proposed by the Treasury in the House and on television.
In the past few days, we have repeatedly heard statements that there will be more reductions in public expenditure. The Chancellor said so a week last Sunday on television and yet a Bill that will cost the British people £400 million is being pushed through by Conservative Whips who are determined to secure better returns for a small minority.
Yesterday, the Government announced another £300 million of penalties on local authorities. That is equivalent to the value of the Bill's concessions to the high paid. There is an inconsistency there. We are giving parliamentary approval to the Government's taking from local councils the precious money that they need to provide eduction, housing and services for the handicapped and giving it to a small minority of people. When people in Cumbria ask their local authority why the council has to close rural schools and services and the local authority says that it is being required to do that so that the Government have the money in the kitty, the people should also be told that the money that is being retained will find its way through the system to pay for the major concessions to the higher paid.
As my hon. Friend the Member for Blackburn (Mr. Straw) said in a notable speech, a married couple earning £20,000 a year will be £9 a week better off as a result of the new income tax arrangements and a married couple earning £40,000 a year will be £21 a week better off. There


are not many people in my part of the world who are so fortunate. Moreover, those concessions will not benefit people in my county as they will tend to go to the south where people are often better off.
When we ask the Government why they persist with that strategy, they say that it is all to do with generating the necessary incentives to achieve industrial renewal. That is not true and we all know it. There is no evidence to suggest that income tax cuts for the better off are feeding a new industrial revolution. We know that, in 1982, 12,000 companies went bankrupt, mainly because of the Government's deflationary strategy. Perhaps many of those who are fortunate enough to listen to our speeches tonight, and to listen to future debates on the economy, will fall under the blunt knife of a Government who are clearly unable to introduce policies that will benefit the wider British public.
The only way to increase incentives in such conditions is to boost demand. The opportunity of increased business is the real incentive needed by industrialists, and the Government know it. However, to protect the ideological routing of the monetarist strategy, they persist in deflecting that fact, which they know to be true. Yet at the same time they are worried about the expansion of the money supply and a general expansion of financial resources, because, through painful experience since 1979, they have seen a massive outflow of funds from the United Kingdom, which now totals £34 billion. In 1982 alone, the grand total of £10 billion was dispatched from our shores to be invested in industry abroad. The Government know that such capital outflow cannot be defended in public, and the expansion of demand worries them because of its implications in increasing the sums of money to which I referred.
I hope that the review of monetary policy that is continuing in the Treasury will lead, in sanity, to the reintroduction of exchange controls, which many people, including, many Conservatives, know is necessary if we are to prevent the massive outflow of funds.
The Bill was born in a Treasury controlled by a Government who are committed to two nations — a nation that has, and one that has not. One day, we shall have the opportunity to remove them from power. I hope that the next time that the British people are presented with the challenge of ending this monstrous arrangement they will take the opportunity to elect a Government who understand that one nation is the priority of all Governments.

Mr. Bill Walker: I congratulate my hon. Friend the Member for Wells (Mr. HeathcoatAmory) on his informative and interesting maiden speech. My hon. Friend is a constituent of mine, and it is no surprise to me that he speaks with such authority about farming. His comments on industrial change were also informative, and I look forward to his elaborating on some of the thoughts that he put forward. One cannot go into great detail in a maiden speech, but his was tantalising and we look forward to hearing much more from him. I am sure that he will make a tremendous contribution to our debates.
The hon. Member for Workington (Mr. Campbell-Savours) made some interesting comments—

Mr. Campbell-Savours: I am glad that the hon. Gentleman agrees.

Mr. Walker: —and there is no doubt that he spoke with some passion about the haves and the have-nots. I suppose that, in terms of world categories, he comes from the haves and I come from the have-nots. It is always fascinating to hear people constantly remind me of the problems of poverty, but who may not believe that I have had first-hand experience of what poverty means. I do not doubt the sincerity of his comments, but he should be a little more selective in putting forward his points.
It was interesting that the hon. Gentleman believed that during the election campaign the real matters that worried the British people were not debated. He said that was because Polaris and defence were the main issues. However, I remind the hon. Gentleman that the Conservative party did not make them issues. They became issues because the Labour party manifesto said that a Labour Government would break the tradition of eight successive Governments. A party that decides to break from something that has been common policy for many decades is bound to attract interest—at least from the media. Once the media become interested in a topic, they keep kicking it around because it helps to sell newspapers or magazines. If the nation spent much of its time talking about defence, it was because the Labour party manifesto mentioned it. The fact that most of us believed that the proposals were bonkers and irrelevant to the real world was reflected in the election results.
I was surprised to hear the hon. Gentleman say, because I know his area well, that not many people who move there because of their jobs take out mortgages in excess of £25,000. I almost moved there some years ago, but I could not afford a property. One must always try to recruit people of the highest calibre to run companies in an area where there is great need to stimulate more interest in business. We can stimulate interest only if there are the right people in top management. We cannot bring about change at the bottom. A company must bring into the area people who are carving a progressive career, but they are usually hard up. If one is climbing the ladder, one must live in a house that is in keeping with the job, which normally needs a fairly large mortgage. That has been my experience, and I am sure that it is the experience of everyone who has attempted to climb the slippery ladder of promotion in the business jungle. Therefore, it is right to grant some benefits to those who may need a mortgage of up to £30,000.
It is sad that the Labour party has not realised that those who need such mortgages are articulate managers who talk to their workers. Every time they move home, they take a risk. If they are unsuccessful, they fall flat on their faces and no one cares too much. It is important to move into the sort of property in which one's workpeople expect one to live in order to provide them with the leadership that they seek. The workers more than anyone make the assessments, and they expect their managers to look and play the part. That is vital if one is to provide leadership.
If we are to retain top management, our tax structure should provide the rewards so that the best people are kept in Britain to do the vital and important jobs. The shortage of managers affected many businesses, not just the likes of ICI. In the main, Britain's industrial problems were caused by two simple factors. First, we did not have the right people managing, and, secondly, we had ghastly


industrial relations due to the attitude of the trade unions in wanting to keep things as they were. 10, 20, 30 or 40 years ago.
We need good, effective and capable management to bring about changes in work attitudes. That is management's job and responsibility, but we were losing such people. They went to other parts of the world where the rewards for such risk-taking were more commensurate. To bring about change, these individuals must be risk-takers. If they are not, change will not be brought about. Instead, they will play safe, do nothing, maintain the status quo, and eventually, like the dinosaur, our industry will die.
My hon. Friend the Member for Wells made an oblique reference to the need for change in the Civil Service. The lesson is that if civil servants are ever to change, they must also learn that that means risk-taking in Government service. If the civil servants play safe and stick only with the status quo, there will not be change.
The hon. Member for Cunninghame, South (Mr. Lambie) mentioned the Select Committee on Scottish Affairs inquiry into free ports. He was concerned that the mandarins in the Civil Service and the Treasury were determined to kill this off because they had been against it from the outset. I hope that is not true. Although I had considerable reservations about free ports, I and other hon. Members substantially changed our position as a result of the inquiry. We looked at free ports abroad, particularly in the United States, which is a modern, developed country, and found that the free ports there had much to offer. That could not always be measured in financial terms, because much of it was packaging and marketing in management, which had a great deal to do with the drive that brought about additional business.
I hope that my right hon. and hon. Friends on the Treasury Bench, when looking at free ports, will look beyond the financial considerations to what can be done, because image is important. Image is not what one thinks of oneself—it is what others think. Too often—this is certainly true of politicians — we begin to believe the image that we project. That is dangerous, because it is what others think that really matters. That is equally true of business. The image of the free ports in the United States was brought home to me. I went there not exactly sold on the idea. In fact, I was somewhat cool about it.
I have already referred to the increase in the mortgage ceiling from £25,000 to £30,000. I have shown that that links to the changes that we shall make in the tax bands. I have always recognised that in those two measures we were not helping the majority of people directly. I have accepted that from the outset, but I also acknowledge that unless we help those who create wealth and jobs through incentives and encouragement, we shall never be able to help those further down the ladder. We must always start with those who make things happen — the risk-takers, the organisers, and managers.
I hope that is only a beginning. It should not end there. I should like to see the policy continued so that there are considerable improvements in the tax bands.
As to the poverty trap, we must all be concerned about individuals who in many instances find that they are better off not working. They work for their pay, but, after the deductions are made, they find that they are no better off than those who are on the dole. If that happens, there is no incentive to work. I find that very disturbing.
I have never felt that the answer was to penalise those who were out of work. I believe that the answer lies in dealing with those who are in work. There are many more people in work than out of work. Therefore, one has to acknowledge that it is more difficult to do something meaningful and positive for those who are in work than for those who are out of work.
At one time, we considered changing the tax system to ensure that those in work would always be guaranteed a minimum wage. Different terminologies have been used. The idea was that the Exchequer should so balance its books that those who were working should be given a guarantee that their income would not fall below a certain level. It does not matter whether the aim is achieved by means of tax credits or in some other way. I hope that the Government will consider that possibility again, although I do not expect miracles at a time when the world is suffering from a great economic depression.
I make no apology for drawing attention again to the tourist industry, which is one of the largest employers in Scotland and vital to the Scottish economy. The tourist industry in Scotland employs 92,000 people. More people work in that industry than in industries, such as mining, about which we hear a great deal more. I should like to remind my right hon. and hon. Friends on the Front Bench that one can encourage people to visit tourist areas only by providing incentives. Scotland has beautiful scenery and marvellous facilities, but we cannot guarantee the weather in Scotland any more than in London. We must make the best use of our assets. The Government should carefully consider how, in future, we should tax the income derived from holiday cottages and other tourist facilities, which are often the only means of generating cash flow in the highlands.
We should also consider how we tax petroleum products, particularly petrol, because petrol duty is regressive for those who live in rural areas. The further one travels from the main centres of population— and my constituency is about as far away from them as one can get — the fewer petrol pumps there are and the more expensive petrol becomes. However, local people have no choice, because there is no public transport. Originally, cars were a luxury for the few. Because petrol was cheap in the days before the OPEC countries hiked the price up, cars gradually became available to the many. People were forced into acquiring cars at the time when costs were low. Costs are now high, and wages in the highland rural areas are very low because the bulk of the work is in agriculture, in small businesses, such as garages, and in hotels. I advise my right hon. and hon. Friends on the Front Bench to remember for many people in my constituency the car is not a luxury but a necessity. They need cars in order to get to work.
I do not want my right hon. and hon. Friends to think that I do not consider this to be a good Finance Bill. I think that it is a satisfactory Bill. It will be a small contribution to the change in emphasis that we called for in 1979 and have been working towards ever since. I welcome the Bill, and it will be well received in my constituency. Unlike the hon. Member for Workington, I hear many people talk about the mortgage provisions and the tax bands. That is because the small firms in my constituency hope that in future they will be managed by people who can afford to live in that part of the world.

Several Hon. Members: rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I remind hon. Members that the Front Bench speeches will begin at approximately 9 o'clock.

Mr. David Winnick: Having won the election, the Government almost immediately get down to their first priority, which is to make sure that the richest 3 per cent. of taxpayers are given as much relief as possible. We are told by Conservative Members that the tax relief is necessary to galvanise the managers and others into action. That is a familiar old argument, going back to 1979, and it reminds me of what happens when it is suggested that private rents should go up and rent control should be abolished. Then the plight of widows is brought into play by Conservative Members.
I find it disturbing, though not surprising, that Government supporters are quick to make speeches and ask questions about wage increases if the people concerned happen to be the low paid in the public sector. But when it comes to giving further tax relief to the richest people in the community, they make speeches about why that is necessary, and the hon. Member for Tayside, North (Mr. Walker) did just that.
The hon. Member for Bridlington (Mr. Townend) argued, as one would of course expect, in favour of the Bill, yet he has been waging a ceaseless campaign against the decisions of wages councils, which are concerned with the wages of some of the lowest paid in the community.
There have been constant leaks in the press in recent days about forthcoming cuts in public expenditure, and there is little doubt that such cuts will occur. Presumably such reports have been leaked to the press from 10 or 11 Downing street, or both, to get people used to the fact that there will be cuts in housing, education and the social services, though not in defence. It is against that background that we are debating this Bill.
We must be concerned about the possibility — the Prime Minister did not really deny it yesterday when questioned by some of my hon. Friends—that after the increases in unemployment benefit in November, it is likely that the following increase in benefit, if there is one, will not be in line with inflation. It is possible that the same will apply to short-term supplementary benefit.
I particularly resent the lying propaganda put across in the press that a number of the unemployed do not want to work. That is being used as an excuse to ensure that unemployment benefit is not increased in real terms. That is part of the argument which Ministers are now trying to get across to the country. We are told that some people — from the way in which the argument is being adduced, one gathers quite a number—are in the dole queues because they do not want to work. That is a lie. Consider the position in the black country and the west midlands generally. People who have been made redundant there in the last few years find it virtually impossible to find other jobs, especially if they are in their late forties or fifties. Indeed, the tragedy is that many of our fellow citizens who are on the dole and unable to find work are faced with the prospect of never being able to work again unless there is a change in economic policy. Are the Government really concerned about that? Are they really interested in policies to bring down unemployment?
It seems that the Government's first wish is to try to get across the propaganda that a good number of the unemployed do not want to work so as to justify not raising

unemployment and short-term benefits. It is interesting to note that, due to changes in taxation of unemployment benefit, 5 per cent. was taken off the unemployment benefit increase three years ago. That will not be made up until November this year. In fact, the unemployed who pay tax on their benefit are at the moment subject to double taxation. I wonder how many Conservative Members have been protesting about that. One or two of those who are called the Tory wets protested. They did not do much about it, but they made their protests.
Many of the speeches today came from those right hon. and hon. Gentlemen who never protested in the House, or outside, about the fact that 5 per cent. was taken away from the unemployed and was not restored when unemployment benefit was no longer subject to taxation.

Mr. Bill Walker: Does the hon. Gentleman realise that at the time that the 5 per cent. reduction took place there were many people in work who had not had wage increases for some time and that at that time some airline pilots even took a cut?

Mr. Winnick: The hon. Gentleman is trying simply to condone something that was totally without justification. I believe that the House will consider his remarks as being rather appropriate for him.
About 3 per cent. of the richest taxpayers will now receive further benefits from the Government. The majority of people though who pay tax are paying more in income tax and insurance contributions than they were when the Labour party was in office. In 1978–79, a married couple on 75 per cent. of average earnings would have been paying 14·5 per cent. of those wages on income tax and national insurance contributions whereas in 1983–84 they are paying 18·5 per cent. Someone on average earnings who was paying about 20 per cent. of his wages in income tax and national insurance contributions during the last financial year that Labour was in office is now paying 22 per cent. We know that most people are paying more, not less, as a result of the Government's fiscal policies.
We should be particularly concerned that—my hon. Friend the Member for Motherwell, South (Dr. Bray) was absolutely right — people on low incomes have been brought into the income tax bands when they should not have been. People with very limited incomes are paying income tax. My sympathies are with those people. I have had understandable and justifiable complaints from constituents who have written to me or seen me at my surgeries—some of them are retired—asking why they must pay income tax.

Mr. Bill Walker: indicated assent.

Mr. Winnick: I see the hon. Member nodding his head. If the Government were really concerned about such people we would have a Finance Bill that tried to ensure that those people did not have to pay tax. That should be the first priority of the Government, if they had any concern or compassion for those in need. We know that the Bill does not do anything of the kind. It deals with the people to whom I referred when I began my remarks. My hon. Friend the Member for Motherwell, South referred to the Sub-Committee of the Treasury and Civil Service Committee. What is required is a change in the structure of income tax to ensure that there is more justice.
As for the tax relief on mortgages up to £30,000, it is totally untrue to say that the Labour party is opposed to owner-occupation. It has always been in favour of people having the opportunity to own their own homes. A Labour Government introduced the option mortgage scheme which gave many people who would otherwise have been unable to get a mortgage the opportunity to do so. I am not in favour of raising tax relief. As some of my hon. Friends have said, it is a step which, apart from anything else, will increase the price of houses and, by so doing, make it more difficult for some people to obtain a mortgage.
We must compare what is being proposed in the Bill with the phasing out of subsidies for public sector tenants. Many council tenants are paying far more rent because subsidies are being reduced and phased out by the Government. In contrast, the cost of tax relief on mortgages is constantly increasing.
One of the questions that we must ask ourselves is, "Should the subsidy to owner-occupier; be open-ended?" I tend to believe that there is some justification for tax relief on mortgages. I believe that it is right and proper and I have argued that point within my party. On balance, there is a strong case, for housing and other reasons, for that form of subsidy to continue. However, I am not in favour of its being increased to £30,000, and nor do I believe that the subsidy should be open-ended. There may be a case for saying—I throw this out for the sake of argument—that some people should receive tax relief on a mortgage for a period of perhaps 25 years. That is what I mean by trying to close the gap on an open-ended subsidy.
If we are to provide money from the public purse—and that is what we are doing—it should go to the people in the greatest housing need. The money being provided under the Bill will not go to those on the lowest incomes or in the greatest housing need.
I do not deny that in some parts of the country, such as London, house prices are such that it may be difficult to find properties under £35,000 or £40,000. That is not necessarily the case in many other parts of the country. When one recognises the amount of housing hardship and misery, it is difficult to justify what the Government are proposing. The economy is sick and the signs are that unemployment will continue to grow. There must be few Conservative Members who believe that unemployment will be lower by the end of this Parliament. The signs are that the opposite will be true. The growth rate of the economy will be low and we shall have large cuts in public expenditure. We are debating the Bill against that background. There is no doubt that, as my hon. Friends have said, this is a bad Bill which contains no justice. We shall therefore be justified in voting against it.

Mr. Albert McQuarrie: I welcome the maiden speeches made by my hon. Friends the Members for Wells (Mr. Heathcoat-Amory) and for Strathkelvin and Bearsden (Mr. Hirst) and other hon. Members today. There are so many new Members that we have the pleasure of enjoying many maiden speeches. It is encouraging that so many of them have taken the opportunity of the debate on the Finance Bill to make their maiden speeches.
I welcome the Bill. Clause 10 raises relief for business and agricultural property from 20 per cent. to 30 per cent. under capital transfer tax. It will be of considerable benefit because it does something that we have been endeavouring

to do for a long time in Scotland — it encourages landlords to let land. There have been too few opportunities for young farmers to develop land under a tenancy agreement. I hope that this clause will encourage landlords to give young farmers who want their own tenant farms the opportunity to go into business without having to borrow too much cash.
The hon. Member for Cunninghame, South (Mr. Lambie) mentioned free ports. I am disappointed that they are not specifically mentioned in the Bill. I shall refer to the report of the working party under the chairmanship of the previous Economic Secretary to the Treasury, which was set up to discuss free ports. As the hon. Member said, the Select Committee on Scottish Affairs studied in great detail the advisability of having free ports in Great Britain. We discovered that it would be of considerable advantage to Britain if we had free ports. One of the places that we visited when we investigated this subject was Hamburg, where there are 60,000 employees, turning over £590 million. There are 1,000 different firms and only 70 or 80 are manufacturing firms. The rest export and process. That is an example of what we want to see in Britain. There are 70 zones in the United States. Also, 8,000 employees work at Shannon.
The working party went into great depth, having looked at the Select Committee's report. The Secretary of State for Scotland accepted that free ports were feasible. I thought that in the Finance Bill due cognisance would have been taken of that support. Page 33, paragraph 9·8, of the working party's report stated:
Having considered all the evidence, it is the conclusion of the Working Party that there would, on balance, be merit in opening the way to the establishment of such free ports in the United Kingdom. We therefore recommend that amending legislation should be introduced forthwith to make this possible. Such legislation should be drawn so as to permit all forms of activity —transhipment, warehousing, processing and related services—allowable under the EC free zones Directive to be undertaken.
I am particularly interested in the comments on transhipment. In my constituency we have a fine port that could be used as a free port and a sea port, from which goods could be transhipped. At present there is high unemployment there. An organisation run by the Grampian regional council, called the North East of Scotland development authority, has clearly stated that Aberdeen could be suitable for a free port. Of course, I claim that my constituency is the most suitable part of the Aberdeenshire area for such a free port because there are facilities not only in Peterhead but in Fraserburgh. In both ports there are deep water facilities that would enable the transhipments to be made.
It is interesting that NESDA, in its report to the working party, referred to the
cost savings from the simplification of procedures for inward processing relief or warehousing".
It also suggested:
A free port could include an international exhibition centre for equipment.
When we visited Miami, we saw an exhibition centre which had over 1,000 different warehouses operating in showrooms, covering the whole of south America. The number of employees was incalculable, because it was continuing to increase day by day. The concept of the free port in Miami had caught on to such an extent that the amount of ground available was being overtaken, and consideration was being given to the acquisition of additional areas.
A further point made by NESDA was that a free port would
generate employment and airport traffic, as well as offering a marketing advantage for the area in which it is established.
North sea oil and gas come ashore on the mainland in my constituency at St. Fergus and Cruden Bay. In Peterhead there are many oil-related industries that could process the items that I have mentioned, forming part of a free port.
I hope that the Government, in their wisdom, will give due consideration to paragraph 9·8 of the working party report, because it is clear that there is considerable scope in the United Kingdom for the reduction of unemployment by the creation of new business in free ports. If free ports have been successful in other parts of the world, we should get them started as quickly as possible in the United Kingdom. Legislation should be introduced as early as possible. The Government should take cognisance of the report and ensure that action is taken along the lines suggested to create employment. We have the expertise, the skills and the materials. In my constituency the necessary facilities, including customs, are already there, and I hope that the Minister will give the House some assurance tonight that the Government will give serious consideration, before the Bill completes its Committee stage, to the recommendations of the working party.
As the hon. Member for Cunninghame, South said, Prestwick is an area that needs a great deal of support. It was at one time a famous international airport. It has degenerated into a place with high unemployment. His call for a free port at Prestwick should not go unheeded by the Government. The Government should recognise the need for free ports in various parts of the United Kingdom, and act accordingly.
I hope that the Minister will take due cognisance not of the derogatory parts of the working party's report but of the more positive parts, which suggest that there is scope within the United Kingdom — and in particular in Prestwick and in my own constituency—for the creation of employment where there is now high unemployment, and for the creation of new outlets for the goods and services that we can provide in Britain.

Mr. Mark Fisher: People expect this Finance Bill to address one fundamental question: how do we create the financial and economic circumstances that will get us out of this desperate recession and back to work? There is nothing in the Bill that addresses that problem, as there was nothing in what the Chief Secretary said or in the speeches of Conservative Members. From all those things, I would not know that outside the Chamber there was a recession.
This is a smug Bill. I would not know from it that the country was in crisis, particularly north of Birmingham, in my constituency and the north of England. There industry is devastated, plant is standing unused, skills are being lost every week and month and the Government have the impertinence to call this devastation slimming. We are meant, at the end of the process, to be a fitter industrial country. This is not industrial slimming; it is industrial anorexia, and anorexia destroys. The Government, with their blindness to everything except inflation, do not recognise the extent of the crisis.
The right hon. Member for Guildford (Mr. Howell) talked about economic management being an art and made it sound like a decorative skill such as painting miniatures —a nice interest suitable for gentlemen like himself. I have a different view of art. It has a strong social responsibility to address itself to the problems of human beings as they live on this planet. If the right hon. Gentleman is serious in addressing his art of financial management, its subject is a grim one. He is looking at a grim landscape both industrially and socially.
Manufacturing output is plummeting and even the CBI, the great friend of the Conservative party, says that investment will fall by another 5 per cent. this year. For the first time in our history, we are importing more manufactured goods than we are exporting. What a disgraceful record for the Government. Conservative Members, many of whom run and own small businesses, are surprised that there is no growth in small firms, but that is because there is no activity in the economy. The Government do not seem to recognise that they have a responsibility to shape and determine the real world of industry. In failing to address that problem in the Finance Bill, they are failing to address their responsibilities.
The only matter of substance in the Bill is help for the rich in the form of income tax cuts, capital transfer tax cuts and mortgage interest tax relief—what a disgrace. If that is how the Government confront the problems of the economy and industry, they do not understand what is going on outside. How can it help this country that a man on £44,000 a year will be £6,188 a year better off because of the Bill? How will that help the economy?
The Government say that help for the rich encourages incentives. They fail to explain how making managers richer makes them work harder. That is an insult to our industrial managers, many of whom are highly skilled and hard working. They work harder not because they are paid more, but because of the problems that confront their industry and their sense of responsiblity to the future of those industries.
What is more, hard work because of greater tax incentives does not create what industry needs. It needs investment, trading, better plant and machinery, apprenticeships, research, sales and industrial planning. Those are the things for which we should be looking and the incentives that we should be giving to industry. We should not be giving handouts to managers who are already well paid. There is no justification for the incentive argument. Tax cuts are merely personal rewards. They have no effect on the economy.
There is no credibility in what the right hon. Member for Guildford said about tax cuts helping to stimulate investment in industry. Where does the increased investment or wealth go? It does not go to British jobs. Some £37 billion went out of the country because the Government took off exchange controls, and even if there has been an inward investment of £16 billion, that is still a £21 billion net loss—£10,000 capital investment per job. The House can work out how many millions of jobs have been lost because the investment that the Bill is supposed to stimulate is going abroad.
The Bill does nothing for the real needs of industry or the country. It does nothing for the real needs of investment, reflated demand or higher education, particularly in applied science. It does not address the real


need for work for people. The Bill will not do. It is an inadequate response economically and inadequate as a plan for a caring society.
Ours is a caring society and soon the electorate will say clearly that such a policy and such a Bill will not do. Many Conservative Members know that it will not do, because they know that nothing in the Bill has the spirit of social justice or industrial growth. It is a shabby Finance Bill. The country needs a Finance Bill that will put its industrial skills, its industrial imagination and brilliance back to work. This Bill is definitely not it.

9 pm

Mr. Robin Cook: My practice is to respond to debates on tax by saying that we have had a good debate. I am happy that on this occasion I say that with greater enthusiasm than I have on some occasions. We have heard an excellent and distinguished debate to which eight maiden speakers contributed.
From the Government Benches we heard five skilled maiden speeches. The Financial Secretary will mention individually each of his hon. Friends who made their maiden speeches today. I shall single out only a couple of Government maiden speeches. I offer a word of friendly warning to the hon. Member for Bristol, North-West (Mr. Stern) because I suspect that the Financial Secretary will omit to do so. If the hon. Gentleman continues to show such technical mastery of tax law, it is a sure recipe for being confined each summer to the Finance Bill Committee. That is the nearest that the House gets to exercising its prerogative to impose imprisonment.
I am grateful to the hon. Member for Stratford-on-Avon (Mr. Howarth). The House owes him a debt since he advised us at the outset of his speech that formerly he was the director of the research department at Conservative Central Office. The hon. Gentleman gave us a revealing insight into the work, ethics and values of that office. We can now see clearly that all the talk of Victorian values that we have noticed in the newspapers in the last few months is firmly rooted in the appreciation of Victorian economic theory in the research department at Smith square.
The hon. Member referred in glowing terms to his predecessor, Sir Angus Maude. The hon. Gentleman defeated a former Member, Mr. Frank. Hooley. I recall the work that Frank Hooley did in the House. He was one of my close friends and he taught me how the House can be used to raise issues of concern to the conscientious Member. He combined punctilious service to the residents of Sheffield with dedicated campaigning for the poor and dispossessed of the Third world. If the hon. Member for Stratford-on-Avon succeeds in making the same contribution to the House as the man whom he defeated he will achieve a level which few Members attain.
Two of my hon. Friends made their maiden speeches today. The first was from my hon. Friend the Member for Sedgefield (Mr. Blair) who spoke ably and movingly about unemployment in his constituency. I last met my hon. Friend when he was a candidate in Beaconsfield in very different circumstances from those in Sedgefield. I congratulate him on having found territory which is more politically congenial than Beaconfield, although with very different social conditions and economic problems. I advise my hon. Friend that those of us who, like himself, come from north of the privet hedge territory around the south-east cannot too often remind the House that our constituencies contain pockets of unemployment of over

40 per cent. One reason why we repudiate the Conservatives' economic strategy and policy is that it is we who represent the areas of mass unemployment which are the victims of the policy pursued by the Treasury Bench.
Another maiden speech was made by my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) in his characteristically fiery style. I particularly relish the irony of welcoming his maiden speech in the House in a week following a reference to me in his entertaining column in the New Statesman. It was, if I may say so, entirely unprovoked. I assure my hon. Friend that his command of language and invective sounds much better when it is being applied, as it was tonight, against Conservative Members than when it is being applied against his comrades.
My hon. Friend was right to point out that we live in a fool's paradise sustained with the black gold of North sea oil. My hon. Friend might not be present but he is a prodigious reader as well as a prodigious writer and is capable of reading what I say tomorrow. We can get a glimpse of Britain's shattering future, of which my hon. Friend warned, if we simply deduct from Britain's exports the contribution made by North sea oil—a contribution which from next year will start to decline. No hon. Member could do that calculation and fail to be concerned by the result. It will show that we are heading for a chronic constant structural deficit in our balance of trade.
The right hon. Member for Guildford (Mr. Howell) treated us tonight to his resignation speech. It was in marked contrast to the speech last week from the right hon. Member for Cambridgeshire, South-East (Mr. Pym) who left the House in no doubt how he came to be sacked from the Administration. Anybody who listened intently to the speech of the right hon. Member for Guildford would have had great difficulty working out why he had to be fired from the Administration when he has such modest differences with it.
I want to take up one point with the hon. Member for Colne Valley (Mr. Wainwright). He said that he would not object to a provision in the Bill to uprate the higher rate bands by 5·6 per cent. which would be mere indexation. What he objected to in the Bill was that the uprating exceeded what was necessary to meet indexation. The curious thing about that statement is that the hon. Gentleman, like all Liberal and Social Democratic candidates, stood for election on a manifesto which not only had no commitment to indexing the thresholds but had a specific commitment that a Liberal-Social Democratic Government would not fully index tax thresholds. That commitment was not highlighted in many election addresses, but there it was. The hon. Gentleman and all his colleagues stood on an explicit manifesto commitment to bring into tax even lower income groups than at present, which would deepen the poverty trap from which those groups suffer.

Mr. Wainwright: The hon. Gentleman is always scrupulously fair. Had I not interrupted him, I am sure that he would have finished the paragraph of our manifesto which made it quite clear that we would fail to index for a year only in return for a humane tax system which would release from tax a large number of the poor.

Mr. Cook: The hon. Gentleman will have to refer to his manifesto, which contains three separate items in that


paragraph, all of which were addressed to the specific expenditure proposals of the early years of an alliance Government. It says:
The additional spending which the new welfare system will involve will be paid… First, by the continued phasing out of the married man's extra tax allowance… Second, by not fully indexing personal tax allowances, and third, by a relatively small increase in public borrowing—around £600—£700 million over the final programme.
That paragraph is put forward with precision and with specific commitment, so specific that it is specific to the last £100 million of the borrowing requirement. Given that, I do not think it will do for the hon. Gentleman to pretend that these were rather airy-fairy ideas for long-term examination. It was a specific and precise commitment from which he cannot now escape, however embarrassed he may have been to find that he was standing for election on it.
I return now to the gravamen of the themes which ran through the debate. Two major themes were explored—first, the absence of any clear sign of recovery in the economy and, secondly, the specific contribution of the Bill to increasing inequality in an already unequal society. What better place to start my examination of the theme of recovery than with the hon. Member for Loughborough (Mr. Dorrell) who, I am pleased to see, is now in his place.
I thought I detected a coded message to the hon. Gentleman from the Chief Secretary when the right hon. and learned Gentleman told the House that he had no intention of ever being dragged off a plane for an urgent meeting with Back Benchers. I noted that the hon. Gentleman has discovered strong enthusiasm for the Budget balance. I hope that I do not misinterpret the mood in which he addressed the House if I say that I detected a certain uneasiness on his part that that Budget balance might be disturbed by the zeal and commitment to monetarism of the new Chancellor of the Exchequer. I shall explore in a moment whether there are grounds for fearing that, but I should like to say first that I too share the hon. Gentleman's nervousness about recovery.
Many other people are also unconvinced that we are trembling on the brink of economic recovery. Only the other week, in its quarterly bulletin, the Bank of England said that we are likely to have a recovery that is below the average for the OECD nations. In other words, having had a worse recession than any of our partners in the OECD, we are now about to experience a worse recovery than any member of the OECD. The National Institute for Economic and Social Research was even bleaker last month when it explicity said that it does not expect the present scale of modest recovery of 1983 to continue to 1984. There are the blunter words of Sir Michael Edwardes, quoted in the financial pages of The Guardian last Friday. With scientific caution, he said
I'm not saying there isn't a recovery… just that we're not seeing any".
In his opening speech the Chief Secretary said that we had a major debate on the economy last Wednesday and that therefore there was no point in going over the same ground. I can understand why the Chief Secretary was anxious not to remark on anything that has happened since last Wednesday because every set of figures that has been released since then casts doubt on whether we do indeed tremble on the brink of that recovery. On Monday we had the new figures from the Department of Trade and Industry

which pointed to a yawning gulf between our exported goods and our imported goods. It made the calculation that, in the first quarter of this year, we had a deficit on our trade and manufactures equivalent to an annual rate of £5 billion. That should remind us that a mere six years ago in 1977 we had a surplus in our trade and manufactures of £5 billion.
The dangers of trying to pluck comfort or trying to find a success story from this bleak set of figures was illustrated by the unfortunate fate of the CBI, which last week chose to highlight the chemical industries as a sterling case of advance and pointed out that the chemical industries had increased exports by 3 per cent. Unfortunately for the CBI, it was not aware that on the same day that it issued its press release telling us that the chemical industry had increased exports by 3 per cent. the Chemical Industries Association had issued a press statement expressing its concern about the penetration of the British market, and stating that over the same period imports of chemicals to Britain had increased by 10 per cent., more than three times the rate at which exports had increased. The association stressed that over the past two years investment in the chemical industry in Britain had fallen by 30 per cent. So much for Monday.
On Friday we had two sets of figures that updated our knowledge of the economy from the previous Wednesday. We learned that in the first half of 1983 15 per cent. more companies went bankrupt than in the first half of 1982. In the same period the increase in bankruptcies was 40 per cent. on the same period in 1981. The rate at which companies go bankrupt is greater than at any time since records began. That gives the lie to the claim of Conservative Members that they represent the party of small business. The fact is that small businesses are going out of business at a rate unparalleled in our history.
Bankruptcies are especially high in manufacturing industry. For the first half of the year, bankruptcies in the engineering sector were up 22 per cent. on the same period for the preceding year.
On Friday the Government also produced the unemployment figures, which showed an underlying upward trend. I grant that it is increasingly difficult to spot which way the trend is going, so heavily is it camouflaged by the various ways of tackling and rigging the figures that are revealed each month. However, if account is taken of everything that the Government have done that has a bearing on the figures, the conclusion cannot be avoided that last month there was an upward trend in unemployment that produced an additional 19,000 unemployed. Last month was the 43rd consecutive month in which unemployment increased under this Government. When the hon. Member for Stratford-upon-Avon, who has now arrived in the Chamber, tries to seek a correlation between rising inflation and rising unemployment, I invite him to reflect that, although inflation has been decreasing for the past 18 months—we never stop hearing about that from the Government—unemployment has persisted perversely in soaring.
The only good news that I have been able to find in the week since the previous debate on the economy took place is that Professor Sir Alan Walters, economic adviser to the Prime Minister, is finally departing to John Hopkins university on the other side of the Atlantic. Even that welcome news is qualified by the caveat that he is


committed himself to spending one quarter of his time in Britain exercising his malign influence on the econonmic destiny of our nation.
Although Professor Sir Alan Walters has not done so, some of the economists responsible for visiting upon us the folly of monetarism are now making their excuses. My favourite excuse of the month appears in this morning's edition of The Guardian, which carries an article by Walter Eltis of Exeter college, Oxford. Many right hon. and hon. Members will know that he pushed the Government in the direction of their present economic policies. Mr. Eltis has a wonderful way of talking his way out of the collapse of the export figures. He wrote:
Recent figures may be more dismal than the reality. Our exports may be falling because we are taking extra holidays".
No industrialist in my constituency has complained to me that too many extra holidays are being taken by his workers. Industrialists may complain of many things, but none has yet complained to me about the impact on exports of additional holidays. I acquit the Chancellor of the Exchequer of trying to seek any such flimsy pretext for the failure of his policies.
I now take up the other ground for uneasiness of the hon. Member for Loughborough. He is quite right to suspect that we may about to witness another U-turn back to the full vigour of monetarism of 1981.
The Chancellor is the arch theorist of monetarism. It is curious that the money supply came under control only after he left the Treasury to go to the Department of Energy and as soon as he returned to the Treasury it started to spiral out of control again. Whatever the truth of his management of the money supply, the Chancellor has a reputation to protect in his commitment to the theory. His speech last week showed that he did not resile one jot or tittle from his full commitment to this arcane theory. It showed that he was further diverging from reality rather than converging on it. It is clear from his extra-parliamentary pronouncements since then that he can see only one cure for the ailments of the British economy—public expenditure cuts. If the economy is ailing, his automatic response is to reach for the medieval remedy and try to strengthen it by bleeding the public sector. I confidently predict — here I echc many similar statements by Opposition Members today—that that will make the problem worse rather than better. I say that with some feeling as there is a clear illustration in my own back yard.
The hon. Member for Loughborough has said that, thanks to the Boundary Commission, we are all maidens in some part. I shall not pursue that curious biological concept. In the ways of the House I am something of a middle-aged roué, but as I am making my first speech as a Member for an entirely new constituency I shall give one illustration from my own area.
One of the heaviest programmes to take the largest cuts in public expenditure under the Goverment has been overseas aid. The cuts not only affect the Third world countries grappling with the problems of hunger, disease and degradation. They have a serious impact on British industry which, although it is in deficit with the rest of the world, is still in surplus with the Third world.
On the border of my constituency and that of the hon. Member for Linlithgow (Mr. Dalyell), whom I am pleased to see in his place, is the major British Leyland truck plant. When the Conservatives came to power four years ago, that plant employed 6,000 men. It now employs 1,800.

The truck assembly line depends entirely on orders from African nations, mostly members of the Commonwealth. Last week a further 450 redundancies were announced due to a decline in orders from the Third world. That reflects no lack of need for the product and no lack of competitiveness of the plant but solely the fact that the countries which want and need the trucks cannot now afford to purchase them. One could not hope for a more compelling illustration of the extent to which the future of British industry is tied up with the debt and development crisis of the Third world which the Government helped to create and are doing nothing to resolve.
I do not accuse the Chancellor of not understanding the consequences of his policy. He understands only too well the consequences of the public expenditure cuts that he is preparing. There will be further unemployment and further casualties, as he is pleased to term them, in the war against inflation. We must judge the Bill against that backgorund. There is something surreal about that task. We are dealing with pre-election bribes offered to the House after the election is over.
That surreal offer is the more grotesque in that we are being invited to give away £400 million to the better-off sections of the community at a time when Whitehall is full of the noise of sharpening knives for a barbecue of public expenditure in the autumn. If the Government cannot afford the present level of public expenditure, the overseas aid programme or the present level of unemployment benefit, it follows that they cannot afford to find £400 million for the top 4 per cent. of the population.
Since we last debated this subject, the House has been privileged to receive the report of the Treasury and Civil Service Select Committee about the structure of personal income taxation. I shall refer to it as the Meacher report. My hon. Friend the Member for Motherwell, South (Dr. Bray) has already referred to it. It clearly proves the extent to which our income tax structure is the product of accident and has entirely arbitrary effects. Its central conclusion is that, across the great mass of British taxpayers, the system is not at all progressive. The only corner where one can detect progressiveness is among the top 4 per cent. —precisely the area where the Bill invites us to make the progression less marked. That might not concern us too much were it not for the fact that the report shows beyond doubt that there are major pools of abject poverty. A mirror image of those sections of the community that pay the higher rate of tax is to be found among the lowest income groups who pay a rate of taxation at the margins that is even higher than that borne by the higher income groups earning more than £20,000 a year.
A family paid family income supplement and liable to tax—there are now 50,000 such households in Britain—will lose 30 per cent. in income tax, 9 per cent. in national insurance contributions and 50 per cent. in family income supplement on every extra £1 earned. The extra taxation amounts to 89 per cent. That is a higher rate of marginal tax than the top rate of 83 per cent. which the Government began by abolishing in 1979 on grounds that 83 per cent. taxation was unacceptable. The most appalling figures to emerge from the report show that there are more households at the bottom of the income scale paying those high rates of tax than there are at the top. The Select Committee concludes that there are now 700,000 poor households that, as a result of the interaction of means-tested benefits and the tax scale, pay a marginal rate of tax of more than 50 per cent. That compares with only


270,000 households which pay a marginal rate of tax of more than 50 per cent. at the top of the income scale. There are 500,000 households which have a marginal rate of tax of more than 60 per cent. at the bottom of the income scale as compared with only 70,000 households that pay a marginal rate of tax of more than 60 per cent. at the top of the income scale.
If the House is worried about unfair marginal rates of taxation and their disincentive effects, it should be much more concerned when those excessive marginal rates of taxation and the disincentive fall on the poorest paid households rather than on the highest paid.
I should like to pick out one glaring contrast between the Bill and the Government's proposals for the future of this Parliament. It is now clear from statements that have been made outside the House that the Government are actively considering reducing unemployment benefits in 1984. The theory is that unemployment benefit is too high to price people into jobs and that if it is cut, mysteriously and by some unknown process of osmosis, the unemployed will find jobs into which they will have been priced by the cut of their benefits. That theory is double Dutch to my constituents. I immediately think of one whom I met during the election campaign. He has been out of work for a year since leaving school. When I met him he had just received his 138th job refusal. I also think of another constituent who is a joiner and, aged 46, finds that when he applies for a job he is told that he is too old.
To those people it is an insult to argue that if we cut their unemployment and supplementary benefit they will go out and find themselves a job. They are the casualties of the Government's war against inflation about which the Chancellor talks, but one does not treat casualties by kicking their crutches from under them. I warn the Government of the despair and anger of the unemployed who cannot make ends meet on their present benefits, and I warn them about the additional anger and outrage of the unemployed when they see the stark contrast between the Government's statement that they cannot afford to increase unemployment benefit and the provision in this Bill not merely to increase the higher rates but to increase them by even more than is required by indexation.
That is a terrifying glimpse into the social priorities of a Government who are trying to grasp back with one hand even that which the poorest have, while the other hand is flinging with casual generosity even more money to those who are among the wealthiest 4 per cent. Tonight the Opposition will vote against those double standards, not just because we reject this mean little Bill, but because we reject the rotten, corrupt social division that gave birth to it, and the hypocrisy of an Administration who reward the rich for being rich, while they plot to penalise the poor, who are poor because they cannot find work in Tory Britain.

The Financial Secretary to the Treasury (Mr. Nicholas Ridley): The hon. Member for Livingston (Mr. Cook) talked about double standards. In his speech he suggested that the Government should spend more on overseas aid but cut private investment by the reimposition of exchange controls and impose controls on imports. That would damage the under-developed nations more certainly than any other way.
Today we heard a galaxy of maidens and of talent. The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) is a little tarnished as a maiden, but we missed him greatly in the previous Parliament. I congratulate him on getting into one speech an entire Parliament's worth of bile, as he did this afternoon. He said that when he thought of his constituents in Hackney, he was on the verge of tears. I am sure that the feeling is mutual.
The hon. Member for Sedgefield (Mr. Blair) was most eloquent. I gather that he is the Benjamin of the Labour party. If he survives, like the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan), to become the Father of the House, he will have what Mr. Aneurin Bevan called very many years of endless tedium in the House. He spoke eloquently about the industrial difficulties in his constituency, which I know well, and the terrible problems of unemployment that many constituencies suffer.
Many of my hon. Friends spoke about unemployment. I congratulate my hon. Friends the Members for Erith and Crayford (Mr. Evennett), for Stratford-on-Avon (Mr. Howarth) and for Wells (Mr. Heathcoat-Amory) on their outstanding maiden speeches this afternoon. I must tell the hon. Member for Sedgefield that they are all equally aware of the problems caused by unemployment and of the difficulties presented by the great industrial revolution through which we are passing. They all realised that the maintenance of sound money, the destruction of inflation and the readiness with which we accept industrial change are the ways in which the remedy lies. All three made excellent speeches. I congratulate them and we look forward to hearing from them again.
My hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) made an excellent historical survey. I did not know where his constituency was. He told us most accurately, and I am grateful. He talked about housing policy, and I shall have more to say on that later. I would only tell him now that stamp duty was raised by a considerable amount last year. It was thought that, as that had priority last year, it was right to give mortgage interest relief priority this year. We could not afford to do both.
My hon. Friend the Member for Bristol, North-West (Mr. Stern) spoke in moving terms of the city of Bristol. He complained that there was too much legislation, and held up that dreadful yellow book that might easily be called the "Butterworth mountain". I visited him during the election. He was a most remarkable candidate. He ran from house to house—

Mr. Winnick: He was running from the right hon. Gentleman.

Mr. Ridley: He tried to visit as many constituents as possible. He tried to help everyone.
It is because we have tried to help everyone in tax legislation over so many years that we have such a complicated tax structure. Indeed, in this debate there have been strong requests from four of my hon. Friends to restore reliefs that were included in the original Finance Bill for which, alas, there was no room in this Bill and which the Opposition did not agree to include in that part of the original Bill which became an Act.
My right hon. and learned Friend the Chief Secretary referred to the retirement relief from capital gains tax, which, after consultation, will be remodelled. We shall bring forward proposals in due course.
My hon. Friend the Member for Gosport (Mr. Viggers) referred to the proposed stock relief for houses taken in part exchange. That will also he proposed in next year's Finance Bill, and my right hon. Friend is considering the date from which the relief should run.
The hon. Member for Cunninghame, South (Mr. Lambie) and my hon. Friends the Members for Banff and Buchan (Mr. McQuarrie) and for Tayside, North (Mr. Walker) asked about free ports and the clause that was to be in the original Bill. I assure the House that there is no change whatever in the policy announced by my right hon. and learned Friend the Foreign Secretary in the previous Budget. A question on the procedure will be answered tomorrow, but in brief now is the time to announce the criteria upon which applications will be decided and to invite applications from those who believe that their location would make a suitable free port. That can go ahead, and there will be no delay to the eventual establishment of free ports. The necessary legislation will be included in a future Bill.
I repeat. there is no change in either the timing or the Government's programme.

Mr. Lambie: Will the first free ports be designated by September?

Mr. Ridley: I cannot give that undertaking.

Mr. Lambie: Why not?

Mr. Ridley: Because I do not think that they will be. My hon. Friends the Members for Bridlington (Mr. Townend) and Tayside, North asked about the future tax treatment of holiday lettings—

Mr. Robert Hughes: Will the Minister give way?

Mr. Ridley: Not at the moment.
On 11 May, I said:
At a suitable opportunity we intend to bring forward proposals to change the law so that those carrying on a business of furnished holiday lettings will, in general, be able to claim capital gains tax retirement relief and relief on replacement of business assets, and to have their incomes from such a business treated as earned income, whether or not they are carrying on a trade,"—[Official Report, 11 May 1983; Vol. 42, c. 841.]
I have to tell my hon. Friends that this involves long and complex legislation and that there was insufficient time to prepare it for inclusion in the Bill. There may even he a need for consultation. However, I assure the House that the legislation will appear in the 1984 Finance Bill and that it will become active from April 1983 as was originally announced. The Revenue will have regard to the statement that I have just made when considering cases in the current financial year. However, cases in the years before April 1983 will have to be considered in the light of the present law.
The original 1983 Finance Bill contained provisions designed to nullify the tax advantages that some United Kingdom companies gain by accumulating surplus cash balances in overseas tax havens. Those provisions—clauses 44 to 52 and schedule 7 to 9 of the original Bill — were the product of three rounds of wide-ranging consultations with the international business community. They would have enabled a charge to corporation tax to be imposed on certain companies resident in the United Kingdom with interests in companies under United Kingdom control in low tax areas. We intend to return to this problem in the 1984 Finance Bill, although we remain open to further consultation on the details of the

provisions. To that end, we shall publish revised draft legislation in the summer or the autumn. The draft legislation will incorporate the various changes which were announced by the present Chief Whip on 30 March but which had not been tabled at the time the election was called.
The five main provisions of the Bill are the 14 per cent. increase in the thresholds for the higher rates, the investment income surcharge threshold increase, the increase in mortgage interest relief, the provisions relating to capital transfer tax bands and small changes to CTT, and the corporation tax small profits rate bands. I cannot quite see why the Opposition objected to the final two provisions. I suppose they thought that to do so fitted in with the former Chief Secretary's definition of "mean, vindictive and petty", but I do not know why the Opposition objected to the corporation tax small profits bands. The effect of raising the lower limit from £90,000 to £100,000 and the upper limit from £225,000 to £500,000 is to reduce the marginal rate between the upper and lower limits to 55·5 per cent. In 1978 it was 67 per cent.; last year it was 60 per cent. Without the clause it would be 61 per cent.; with the clause it is 55·5 per cent. That meets a case that has been made by many hon. Members—the hon. Member for Stockton, South (Mr. Wrigglesworth) is among those who have urged help for industry — that we should pay attention to the high marginal rate between the upper and lower levels. That is exactly what we have done.
The cost of the capital transfer tax provisions is only £5 million this year over straight indexation. The main increase is the increase from £58,000 to £60,000 in the threshold for paying the tax. That change is of the greatest benefit to the smallest estates, but the benefit is very small. An estate of £100,000 taxable value that would have paid £13,600 before the clause was enacted will now pay £13,000—a drop of only £600. An estate of £1 million that would have paid £549,650 will now pay £547,250 —a drop of £2,400. Those tiny figures have :0 be set beside the fact that, if we were to go back to the rates that the right hon. Member for Leeds, East (Mr. Healey) introduced in 1974, the tax would raise £75 million less. There is therefore no need for hon. Gentlemen to believe that we have been lax on this tax. Indeed, my hon. Friends could criticise the Government for having extracted more by higher rates than—

Mr. Campbell-Savours: rose—

Mr. Ridley: I am coming to the hon. Gentleman now. He questioned me about clause 12. It would not be right to treat the Channel Islands and the Isle of Man other than in accordance with their constitutional status. They are no different in constitutional status from any British colony or, for that matter, foreign country. It has been the cause of severe complaint from those islands that they are treated as if they were in some way semi-dependencies when they are no different from any other of Her Majesty's dependencies.

Mr. Campbell-Savours: What about the Cayman Islands?

Mr. Ridley: They are no different from the Cayman Islands, the Falkland Islands or any other island which is still one of Her Majesty's dependencies, such as Hong Kong; and if we tried to legislate tax rates for Hong Kong we might find ourselves in some difficulty.

Mr. Straw: I am grateful to the Financial Secretary for the admission that the Channel Islands are no different from the Cayman Islands. Does he accept that the Channel Islands are used in the same way as the Cayman Islands —as a convenient tax avoidance haven for people who are in practice based in this country but who wish to avoid paying their dues to the British Government?

Mr. Ridley: We can debate that next week. All of Her Majesty's dependencies outside the United Kingdom are in exactly the same constitutional relationship, and that is the one that I have described.

Mr. Campbell-Savours: rose—

Mr. Ridley: I have answered the point raised by the hon. Gentleman.

Mr. Campbell-Savours: Does the right hon. Gentleman accept that at a time when the Chancellor of the Exchequer is demanding cuts from all Government Departments some people currently domiciled in the Isle of Man will pay less tax as a result of this Finance Bill?

Mr. Ridley: Yes; there will be a small loss of revenue. Some people who prefer to go to France will also pay less tax than if they stayed in this country.
Regarding the higher rates, the Opposition refused to allow those provisions to go through before the Dissolution for purely mean, petty and vindictive reasons. That is what it was all about.
I find some inconsistency in the Opposition's argument. We have had speeches from the hon. Members for Colne Valley (Mr. Wainwright), for Blackburn (Mr. Straw) and for Stockton, South in which they asked on macro grounds for a far greater amount of public borrowing. I shall not go into the macro economic scene because I want to debate the Bill. Their argument is that the Government should spend a great deal more. By means of this small Bill we are this year injecting about £150 million over indexation into the economy. It seems strange that the Opposition should speak with two voices: they want more money spent and they want to vote against the Bill. In a way, my hon. Friend the Member for Loughborough (Mr. Dorrell) was rather worried by that dilemma, too.
Having dealt with that inconsistency, one must consider how the money should be distributed. The hon. Member for Livingston may not have worked it out. If the current thresholds, before the Bill becomes law, for the higher rates—that is, the 1982–83 higher rate thresholds—were to remain in place for the 1983–84 tax year, they would be lower in real terms than the rates that the Labour Government enacted in 1978–79. Thus, what the Labour party thought was an adequate point at which higher rate taxes should start when they were in Government, it now denies and wants to screw down further. That removes the case that the Opposition have been making today.
In 1981–82 the Chancellor was not able to increase thresholds at all. The effect on those on higher rates was that all the severity to which the hon. Member for Colne Valley referred was reversed. When it is possible for the Government to put right the results of their holding down of the thresholds in 1981–82—as was inevitable —it must be right, and inevitable, that the benefit should be shared equally among all ranges of income.

Mr. Robin Cook: The Financial Secretary has sought to defend what the Government are doing by reference to

the threshold and the higher rate bands introduced by the Labour Government. He will appreciate—I am sure that he would not seek to mislead the House—that if we are to debate where the threshold should be, it is necessary to bear in mind what has happened to rates. The Financial Secretary knows that even those earning up to 10 times national average earnings and who were formerly paying two thirds of their income in tax are now paying barely half their income in taxes because of the way in which he has cut the rates. Having cut the rates, it is entirely right that the threshold be brought down below the levels which existed when the rates were lower.

Mr. Ridley: At last we have the hon. Gentleman's admission that what I said is true. I want to come to those rates.
A married man earning £30,000, with two children, pays in income tax and national insurance contributions combined, expressed as a proportion of his total income, 22 per cent. in France, 29 per cent. in the United States, 32 per cent. in Germany — [Interruption.] Yes, including social security. In Italy he pays 36 per cent. and in the United Kingdom, if this Bill becomes law. 36 per cent. The only country over the top is the Labour party's beloved Sweden, at 63 per cent. That is the country that the Leader of the Opposition wants the United Kingdom to resemble. We are even now towards the top of the pack in terms of international comparisons.
I want to make a point about the higher rates. If the money involved in clause 1 and in the capital transfer tax provisions were to be used to raise all allowances, it would be possible to reduce the basic rate of income tax by one sixth of 1p, in this financial year, or one quarter of 1p in a full year. Using the same figures, it would produce an increase in child benefit of 25p in this financial year and 40p in a full year. That shows how vindictiveness does not pay. Has the Labour party learnt its lesson? Has it learnt that that sort of vindictiveness does not pay?

Mr. Straw: Before the Financial Secretary continues with his efforts to trivialise the expenditure of £280 million upon those in society who are already very wealthy, will he admit that if the Government chose, for example, to use this money to pay the pensioners the increase to which they are entitled, they could do so at a cost of £200 million and still have £80 million left to put into the Health Service? The Health Service is desperately in need of money. It is vindictive and mean-minded on the part of the Government to seek to deny the Health Service and pensioners £280 million which is being given away to the most wealthy.

Mr. Ridley: The hon. Gentleman seeks to spend money without regard to the effects. I have made it clear that it would not have any dramatic effect if it were to be spent elsewhere; nor would it have a dramatic effect on the people from whom he seeks to take it.
The hon. Member for Motherwell, South (Dr. Bray) asked about tax policy. I join the hon. Member for Livingston in querying the Liberal party policy in relation to tax at the lowest rates. This is an important point. The hon. Member for Colne Valley said that 39 per cent. was too high a starting rate and that the threshold was too low. It is extraordinary that he should say that when, in his manifesto, we read that he thinks that the threshold should be held for a year to pay for his proposed spending programme. He wants to lower the starting rate, but the


Liberal party also put forward a scheme for tax credits. Even the Liberal party, in the shape of Mr. Vince, admitted that that would result in a marginal rate of 46 per cent. Treasury costings show that it would be more likely to be 48 per cent. There is a moral there for the hon. Gentleman and for the Labour party. I believe that the House will agree that we want to increase personal allowances and thresholds and, if possible, to reduce the basic rate of tax and national insurance contributions.

Mr. George Foulkes: Wind him up.

Mr. Ridley: If that is to be achieved. the first essential must be to spend less money because the only way to prevent having to increase taxation at that low level is to put more taxes on people who, I believe the House will agree, are already heavily taxed.
My right hon. Friend the Member for Guildford (Mr. Howell) was the only Member who referred to the investment income surcharge relief in clause 1. It is a modest relaxation. It costs £15 million to increase the threshold in line with indexation in the fu Li year. This year, 45,000 people will be exempted from paying tax and it will save nearly 50 staff. My right hon. Friend is pushing at an open door. Hon. Members will agree that many of their humblest and less well-off constituents are victims of that tax as well as its being an income disincentive. I am sure that the House listened to my right hon. Friend with interest and sympathy.
The total cost of mortgage interest relief is likely to be £2·75 billion for the rest of this financial year on the assumption that the mortgage rate remains at 11·;25 per cent. The increase from £25,000 to £30,000 will cost £50 million. I am sure that it is clear to the House that that is only a small proportion of £2·75 billion. I must part company with the hon. Members for Collie Valley and for Blackburn when they suggest that an increase of £50 million of tax relief on £2·75 billion is likely to affect the mortgage rate. The reasons why the mortgage rate went up are well known to all. I am certain that they are in no way connected with the Bill's provisions.
My hon. Friend the Member for Strathkelvin and Beardsden described his constituency as being north of Watford. It is certainly not a suburb of the affluent southeast. He said that the average price of a house in his constituency was £28,300. That seems to justify the rise from £25,000 to £30,000. If more proof were required, I tell the House that the increase that would be necessary since 1974, according to the RPI, would be to £80,000 and, according to the house prices index, £60,000. One has to ask why indexation is vital to so many taxes in the minds of the Liberal party, whereas it is against this indexation which is half that of the house prices index.
The proposals in the Bill fulfil the pledges that we gave before the election and, unlike some politicians, we are intent on redeeming those pledges now that we have been re-elected. The Bill contains justice for all classes as well as the implementation of those pledges. I commend it to the House and hope that it will receive its Second Reading tonight.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 361, Noes 208.

Division No. 10]
[10 pm


AYES


Adley,Robert
Douglas-Hamilton, Lord J.


Aitken Jonathan
Dover, Denshore


Alexander, Richard
du Cann, Rt Hon Edward


Alison, Rt Hon Michael
Dunn, Robert


Amery, Rt Hon Julian
Dykes, Hugh


Amess, David
Edwards, Rt Hon N. (P'broke)


Ancram, Michael
Eggar, Tim


Arnold, Tom
Emery, Sir Peter


Ashby, David
Evennett, David


Aspinwall, Jack
Eyre, Reginald


Atkins, Rt Hon H. (S'thorne)
Fairbairn, Nicholas


Atkins Robert (South Ribble)
Fallon, Michael


Atkinson, David (B'm'th E)
Farr, John


Baker, Kenneth (Mole Valley)
Favell, Anthony


Baker, Nicholas (Dorset N)
Fenner, Mrs. Peggy


Baldry, Anthony
Finsberg, Geoffrey


Banks, Robert (Harrogate)
Fletcher, Alexander


Batiste, Spencer
Fookes, Miss Janet


Beaumont-Dark, Anthony
Forman, Nigel


Bellingham, Henry
Forsyth, Michael (Stirling)


Bendall, Vivian
Forth, Eric


Bennett, Sir Frederic (T'bay)
Fowler, Rt Hon Norman


Benyon, William
Fox, Marcus


Berry, Hon Anthony
Franks, Cecil


Best, Keith
Fraser, Sir Hugh


Biffen, Rt Hon John
Fraser, Peter (Angus East)


Biggs-Davison, Sir John
Freeman, Roger


Blackburn, John
Fry, Peter


Blaker, Rt Hon Peter
Gale, Roger


Body, Richard


Galley, Roy


Bonsor, Sir Nicholas
Gardiner, George (Reigate)


Bottomley, Peter
Gardner, Sir Edward (Fylde)


Bowden, A. (Brighton K'ton)
Garel-Jones, Tristan


Bowden, Gerald (Dulwich)
Gilmour, Rt Hon Sir Ian


Boyson, Dr Rhodes
Glyn, Dr. Alan


Braine, Sir Bernard
Goodhart, Sir Philip


Brandon-Bravo, Martin
Goodlad, Alastair


Brinton, Tim
Gorst, John


Brittan, Rt Hon Leon
Gow, Ian


Brooke, Hon Peter
Gower, Sir Raymond


Brown, M. (Brigg &amp; Cl'thpes)
Grant, Sir Anthony


Browne, John
Greenway, Harry


Bruinvels, Peter
Gregory, Conal


Bryan, Sir Paul
Griffiths, E. (B'y St Edm'ds)


Buchanan-Smith, Rt Hon A.
Griffiths, Peter (Portsm'th N)


Buck, Sir Antony
Grist, Ian


Budgen, Nick
Ground, Patrick


Bulmer, Esmond
Grylls, Michael


Burt, Alistair
Gummer, John Selwyn


Butcher, John
Hamilton, Hon A. (Epsom)


Butterfill, John
Hamilton, Neil (Tatton)


Carlisle, John (Luton N)
Hampson, Dr Keith


Carlisle, Kenneth (Lincoln)
Hanley, Jeremy


Carttiss, Michael
Hargreaves, Kenneth


Chalker, Mrs. Lynda
Harvey, Robert


Channon, Rt Hon Paul
Haselhurst, Alan


Chapman, Sydney
Hawkins, C. (High Peak)


Chope, Christopher
Hawkins, Sir Paul (N'folk.SW)


Churchill, W. S.
Hawksley, Warren


Clark, Hon A. (Plym'th S'n)
Hayes, J.


Clark, Michael (Rochford)
Hayhoe, Barney


Clark, Sir W. (Croydon S)
Hayward, Robert


Clarke Kenneth (Rushcliffe)
Heathcoat-Amory, David


Clegg, Sir Walter
Heddle, John


Cockeram, Eric
Henderson, Barry


Colvin, Michael
Heseltine, Rt Hon Michael


Conway, Derek
Hickmet, Richard


Coombs, Simon
Hicks, Robert


Cope, John
Higgins, Rt Hon Terence L.


Cormack, Patrick
Hind, Kenneth


Corrie, John
Hirst, Michael


Couchman, James
Hogg, Hon Douglas (Gr'th'm)


Cranborne, Viscount
Holland, Sir Philip (Gedling)


Critchley, Julian
Holt, Richard


Crouch, David
Hooson, Tom


Currie, Mrs. Edwina
Hordern, Peter


Dicks, T.
Howard, Michael


Dorrell, Stephen
Howarth, Alan (Stratf'd-on-A)






Howarth, Gerald (Cannock)
Needham, Richard


Howe, Rt Hon Sir Geoffrey
Nelson, Anthony


Howell, Rt Hon D. (G'ldford)
Neubert, Michael


Howell, Ralph (Norfolk N)
Newton, Tony


Hubbard-Miles, Peter
Nicholls, Patrick


Hunt, David (Wirral)
Norris, Steven


Hunt, John (Ravensbourne)
Onslow, Cranley


Hunter, Andrew
Oppenheim, Philip


Hurd, Rt Hon Douglas
Oppenheim, Rt Hon Mrs S.


Irving, Charles
Osbom, Sir John


Jenkin, Rt Hon Patrick
Ottaway, Richard


Jessel, Toby
Page, John (Harrow, W)


Johnson-Smith, Sir Geoffrey
Page, Richard (Herts, SW)


Jones, Gwilym (Cardiff N)
Parris, Matthew


Jones, Robert (Herts W)
Patten, Christopher (Bath)


Jopling, Rt Hon Michael
Patten, John (Oxford)


Joseph, Rt Hon Sir Keith
Percival, Rt Hon Sir Ian


Kershaw, Sir Anthony
Pink, R. Bonner


Key, Robert
Pollock, Alexander


King, Roger (B'ham N'field)
Powell, Rt Hon J. E. (Down S)


King, Rt Hon Tom
Powell, William (Corby)


Knight, Gregory (Derby N)
Powley, John


Knight, Mrs. Jill (Edgbaston)
Prentice, Rt Hon Reg


Knowles, Michael
Price, Sir David


Knox, David
Proctor, K. Harvey


Lamont, Norman
Pym, Rt Hon Francis


Lang, Ian
Raffan, Keith


Latham, Michael
Raison, Rt Hon Timothy


Lawler, Geoffrey
Rathbone, Tim


Lawrence, Ivan
Rees, Rt Hon Peter (Dover)


Lawson, Rt Hon Nigel
Renton, Tim


Lee, John (Pendle)
Rhodes James, Robert


Leigh, Edward (Gainsbor'gh)
Rhys Williams, Sir Brandon


Lennox-Boyd, Hon Mark
Ridley, Rt Hon Nicholas


Lester, Jim
Ridsdale, Sir Julian


Lewis, Sir Kenneth (Stamf'd)
Rifkind, Malcolm


Lightbown, David
Roberts, Wyn (Conway)


Lilley, Peter
Robinson, Mark (N'port W)


Lloyd, Ian (Havant)
Roe, Mrs Marion


Lloyd, Peter, (Fareham)
Ross, Wm. (Londonderry)


Lord, Michael
Rossi, Hugh


Luce, Richard
Rost, Peter


Lyell, Nicholas
Rowe, Andrew


McCurley, Mrs Anna
Rumbold, Mrs Angela


Macfarlane, Neil
Ryder, Richard


MacGregor, John
Sainsbury, Hon Timothy


MacKay, Andrew (Berkshire)
St. John-Stevas, Rt Hon N.


MacKay, John (Argyll &amp; Bute)
Sayeed, Jonathan


Macmillan, Rt Hon M.
Shaw, Giles (Pudsey)


McNair-Wilson, M. (N'bury)
Shaw, Sir Michael (Scarb')


McNair-Wilson, P. (New F'st)
Shelton, William (Streatham)


McQuarrie, Albert
Shepherd, Colin (Hereford)


Madel, David
Shepherd, Richard (Aldridge)


Major, John
Shersby, Michael


Mallins, Humphrey
Silvester, Fred


Malone, Gerald
Sims, Roger


Maples, John
Skeet, T. H. H.


Marland, Paul
Smith, Sir Dudley (Warwick)


Marlow, Antony
Smith, Tim (Beaconsfield)


Marshall, Michael (Arundel)
Soames, Hon Nicholas


Mates, Michael
Speed, Keith


Maude, Francis
Speller, Tony


Mawhinney, Dr Brian
Spence, John


Maxwell-Hyslop, Robin
Spencer, D.


Merchant, Piers
Spicer, Michael (Worcs, S)


Meyer, Sir Anthony
Squire, Robin


Miller, Hal (B'grove)
Stanbrook, Ivor


Mills, Ian (Meridan)
Steen, Anthony


Miscampbell, Norman
Stern, Michael


Moate, Roger
Stevens, Lewis (Nuneaton)


Molyneaux, James
Stewart, Allan (Eastwood)


Monro, Sir Hector
Stewart, Andrew (Sherwood)


Montgomery, Fergus
Stewart, Ian (hertf'dshire, N)


Moore, John
Stokes, John


Morrison, Hon C. (Devizes)
Stradling Thomas, J.


Morrison, Hon P. (Chester)
Sumberg, David


Moynihan, Hon C.
Tapsell, Peter


Mudd, David
Taylor, Teddy (Send E)


Murphy, Christopher
Taylor, John (Solihull)


Neale, Gerrard
Tebbit, Rt Hon Norman





Temple-Morris, peter
Walters, Dennis


Terlezki, Stefan
Ward, John


Thatcher, Rt Hon Mrs M.
Wardle, C. (Bexhill)


Thomas, Rt Hon Peter
Warren, Kenneth


Thompson, Donald (Calder V)
Watson, John


Thompson, Patrick (N'ich, N)
Watts, John


Thorne, Neil (llford, S)
Wells, Bowen (Hertford)


Thornton, Malcolm
Wells, John (Maidstone)


Thurnham, Peter
Wheeler, John


Townend, John (Bridlington)
Whitfield, John


Townsend, Cyril D. (B'heath)
Whitney, Raymond


Tracey, Richard
Wilkinson, John




Trippier, David
Winterton, Mrs Ann


Twinn, Dr Ian
Winterton, Nicholas


van Straubenzee, Sir W.
Wolfson, Mark


Vaughan, Dr Gerard
Wood, Timothy


Viggers, Peter
Woodcock, Michael


Waddington, David
Yeo, Tim


Wakeham, Rt Hon John
Young, Sir George (Acton)


Waldegrave, Hon William
Younger, Rt Hon George


Walden, George



Walker, William (T'side N)
Tellers for the Ayes:


Walker, Rt Hon P. (W'cester)
Mr. Carol Mather and


Wall, Sir Patrick
Mr. Robert Boscawen.


Waller, Gary



NOES


Abse, Leo
Davies, Rt. Hon. Denzil (L'lli)


Adams, Allen (Paisley N)
Davies, Ronald (Caerphilly)


Alton, David
Davis, Terry (B'ham, H'ge H'I)


Anderson, Donald
Deakins, Eric


Archer, Rt Hon Peter
Dewar, Donald


Ashdown, Paddy
Dixon, Donald


Ashley, Rt Hon Jack
Dobson, Frank


Ashton, Joe
Dormand, Jack


Atkinson, N. (Tottenham)
Douglas, Dick


Bagier, Gordon A.T.
Dubs, Alfred


Banks, Tony (Newham NW)
Duffy, A. E. P.


Barnett, Guy
Dunwoody, Mrs. G.


Barron, Kevin
Eastham, Ken


Beckett, Mrs. Margaret
Edwards, R. (W'hampt'n SE)


Beith, A. J.
Evans, loan (Cynon Valley)


Bell, Stuart
Evans, John (St. Helens N)


Bennett, A. (Dent'n &amp; Red'sh)
Ewing, Harry


Bermingham, Gerald
Fatchett, Derek


Bidwell, Sydney
Faulds, Andrew


Blair, Anthony
Field, Frank (Birkenhead)


Boothroyd, Miss Betty
Fields, T. (L'pool Broad Gn)


Boyes, Roland
Fisher, Mark



Bray, Dr Jeremy
Flannery, Martin


Brown, Gordon (D'f'mline E)
Foot, Rt Hon Michael


Brown, Hugh D. (Provan)
Forrester, John


Brown, N. (N'c'tle-u-Tyne E)
Foster, Derek


Brown, R. (N'c'tle-u-Tyne)
Foulkes, George


Brown, Ron (E'burgh, Leith)
Fraser, J. (Norwood)


Bruce, Malcolm
Freeson, Rt Hon Reginald


Caborn, Richard
Garrett, W. E.


Callaghan, Rt. Hon. J.
George, Bruce


Callaghan, Jim (Heyw'd &amp; M)
Gilbert, Rt Hon Dr. John


Campbell, Ian
Godman, Norman


Campbell-Savours, Dale
Golding, John


Carlile, Alexander (Montg'y)
Gould, Bryan


Carter-Jones, Lewis
Gourlay, Harry


Cartwright, John
Hamilton, W. W. (Fife Central)


Clark, Dr David (S Shields)
Hardy, Peter


Clarke, Thomas
Harman, Ms Harriet


Clay, Robert
Harrison, Rt Hon Walter


Cocks, Rt Hon M. (Bristol S.)
Hart, Rt Hon Dame Judith


Cohen, Harry
Hattersley, Rt Hon Roy


Coleman, Donald
Healey, Rt Hon Denis


Conlan, Bernard
Heffer, Eric S.


Cook, Robin F. (Livingston)
Hogg, N. (C'nauld &amp; Kilsyth)


Corbett, Robin
Holland, Stuart (Vauxhall)


Corbyn, Jeremy
Howell, Rt Hon D. (S'heath)


Cowans, Harry
Howells, Geraint


Cox, Thomas (Tooting)
Hoyle, Douglas


Craigen, J. M.
Hughes, Mark (Durham)


Crowther, Stan
Hughes, Robert (Aberdeen N)


Cunliffe, Lawrence
Hughes, Roy (Newport East)


Dalyell, Tam
Hughes, Sean (Knowsley S)






Hughes, Simon (Southwark)
Pavitt, Laurie


Hume, John
Pendry, Tom


Janner, Hon Greville
Penhaligon, David


John, Brynmor
Pike, Peter


Johnston, Russell
Powell, Raymond (Ogmore)


Jones, Barry (Alyn &amp; Deeside)
Prescott, John


Kaufman, Rt Hon Gerald
Radice, Giles


Kennedy, Charles
Randall, Stuart


Kilroy-Silk, Robert
Redmond, M.


Kinnock, Neil
Richardson, Jo


Kirkwood, Archibald
Roberts, Allan (Bootle)


Lambie, David
Roberts, Ernest (Hackney N)


Lamond, James
Robertson, George


Leadbitter, Ted
Robinson, G. (Coventry NW)


Leighton, Ronald
Rooker, J. W.


Lewis, Ron (Carlisle)
Ross, Ernest (Dundee W)


Lewis, Terence (Worsley)
Ross, Stephen (Isle of Wight)


Litherland, Robert
Rowlands, Ted


Lloyd, Anthony (Stretford)
Ryman, John


Lofthouse, Geoffrey
Sedgemore, Brian


Loyden, Edward
Sheerman, Barry


McCartney, Hugh
Sheldon, Rt Hon R.


McDonald, Dr Oonagh
Shore, Rt Hon Peter


McKay, Allen (Penistone)
Short, Ms Clare (Ladywood)


McKelvey, William
Short, Mrs R.(W'hampt'n NE)


MacKenzie, Rt Hon Gregor
Silkin, Rt: Hon J.


Maclennan, Robert
Skinner, Dennis


McNamara, Kevin
Smith, C (Isl'ton S &amp; F'bury)


McTaggart, Robert
Smith, Rt Hon J. (M'kl'ds E)


McWilliam, John
Soley, Clive


Madden, Max
Spearing, Nigel




Marshall, David (Shettleston)
Stewart, Rt Hon D. (W Isles)


Martin, Michael
Stott, Roger


Mason, Rt Hon Roy
Strang, Gavin


Maynard, Miss Joan
Straw, Jack


Meacher, Michael
Thomas, Dr R. (Carmarthen)


Meadowcroft, Michael
Thompson, J. (Wansbeck)


Michie, William
Thorne, Stan (Preston)


Mikardo, Ian
Tinn, James


Millan, Rt Hon Bruce
Varley, Rt Hon Eric G.


Miller, Dr M. S. (E. Kilbride)
Wainwright, R.


Mitchell, Austin (G't Grimsby)
Wallace, James


Morris, Rt Hon A. (W'shawe)
Warden, Gareth (Gower)


Morris, Rt Hon J. (Aberavon)
Wareing, Robert


Nellist, David
Williams, Rt Hon A.


Oakes, Rt Hon Gordon
Wilson, Gordon


O'Brien, William
Winnick, David


O'Neill, Martin
Wrigglesworth, Ian


Orme, Rt Hon Stanley
Young, David (Bolton SE)


Owen, Rt Hon Dr David



Park, George
Tellers for the Noes:


Parry Robert
Mr. James Hamilton and


Patchett, Terry
Mr. Frank Haynes.

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Committee of the whole House —[Mr. Goodlad.]

Committee tomorrow.

Merchant Shipping

Mr. Roger Stott: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Merchant Shipping (Medical Examination) Regulations 1983 (S.I., 1983, No. 808), dated 1 June 1983, a copy of which was laid before this House on 15 June, be annulled.
The hon. Member for Wallasey (Mrs. Chalker), the Under-Secretary of State, is a sparring partner of long standing. We welcome her Government taking the advice offered in the Labour party manifesto to incorporate aviation and shipping in the Transport Department. If the hon. Lady and the Secretary of State continue to follow the Labour party's advice on transport policy we shall have little to quarrel about.
The need for the regulations arises because the Government ratified international convention 147 in 1978. As a result, we have an obligation to ensure that seafarers are medically examined at approved intervals, that certificates of fitness are issued and that the facility for appeal to an independent referee is provided to seamen denied a certificate because of alleged ill-health.
In modern times United Kingdom seafarers have been subject to such examinations. I was subjected to them when I was at sea, as was my hon. Friend the Member for Kingston-upon-Hull, East (Mr. Prescott). As a consequence of the regulations the examinations will be of a statutory rather than industrial nature. One might say that there is no significance in that, but the regulations exclude seafarers serving on ships of less than 1,600 tonnes. That is in harmony with the general sphere of application required by convention 147. The National Union of Seamen, the principal union concerned, did not object at the time. However, because of the Union Star and other, similar, incidents, it has been persuaded that such exemptions should not be granted. All British ships and seafarers should be subject to the same regulations.
Seamen serving on ships of over 1,600 tonnes are subject to the regulations, but seamen serving with the same company on ships below that weight are not. Nothing prevents the United Kingdom from applying a lower limit. I am advised that the Danes have a 20 tonne gross weight figure. Why cannot the United Kingdom follow suit if we are both operating under the same International Labour Organisation convention? Ships of less than 1,600 tonnes figure most prominently in the casualty returns. The General Council of British Shipping consistently implies that seafarers in its sector are less at risk than they often wish to claim but that seafarers in the non-federated sector are at greater risk. We cannot endorse a set of regulations which exclude medical certification for seamen to operate and sail ships of less than 1,600 tonnes. If we are to have regulations on the health of seafarers they should be spread across the spectrum of employed personnel within British shipping. They should not stop at some arbitrary figure of 1,600 tonnes. That is a major omission in the regulations to which I draw the Minister's attention.
Secondly, of great concern to the National Union of Seamen and with which my hon. Friend the Member for Kingston upon Hull, East will deal better than I, if he catches your eye, Mr. Speaker, there is the sum of money that seamen have to pay for these medical examinations. Regulation 10 proposes to charge each seafarer who appeals to an independent referee the sum of £48, of which £15 is returnable if a medical examination is not




undertaken. Currently, within the GCBS sector the employers bear all the expenses, including those for travelling. To confront a medically redundant seafarer with such an expense is unheard of. I suspect that it is another example of the self-financing public service philosophy that is favoured by the Government. The Minister should give us a commitment that the Government will place that expense on the shoulders of the seafarer's employer if the seafarer has been employed by the shipping company for six months or more.
The regulations give exemption to persons employed on ships but who are not employed directly by the shipping companies. That includes people such as musicians, shopkeepers and mobile repair gangs. I am advised that the NUS has pointed out that anomoly to the Department of Trade, as it was, and to the Department of Transport. It argues that such people sail on ships and are an integral part of the ship's company, so why are they exempted from the regulations? That is the second exemption that is being proferred under the regulations.
The medical examination standards are an emotive matter. The NUS and those seamen who will be subjected to the regulations contend that the medical profession will exercise its opinions under the regulations in respect of people's employment. If seamen are found to be in some way medically unfit according to the regulations, they will lose their jobs. I believe that the Minister is sympathetic to the objections to the medical conditions in the regulations. This is a way of making people redundant and that is why the NUS and the Opposition feel strongly about it.
I hope that the Minister will understand the strength of feeling that there is within the NUS, particularly among those who are over the age of 35. The medicals will be compulsory and those people over 35 working in our merchant shipping fleet are probably more prone to illness and sickness than younger men. If they are subjected to stringent medical standards, it could lead to the termination of their employment. That is our serious criticism of the medical standards contained in the regulations and that is the problem worrying the National Union of Seamen.
I should like to put to the Minister five points, to which I hope she will be able to respond. First, the Minister should convey to the approved medical practitioners the concerns of the seafarers. The hon. Lady will know of these concerns because I assume that she has had several letters of complaint from seafarers about the way in which the present standards are applied. The medical practitioners need to be reminded that the high standards of medical fitness that they are being called upon to administer are not matched by the standards of ill-health prevention. Indeed, according to the National Union of Seamen, little preventive or educational work is being undertaken in the shipping industry.
Secondly, the Minister should convey to the approved medical practitioners her concern that special care and consideration should be extended to those over the age of 35. Those seafarers may soon be in the majority because of the declining work force, yet they are also the most vulnerable because they are the most prone to ill-health. Doctors should be asked to give seafarers in this age group every reasonable opportunity to remain at work for as long as possible, provided this is the lesser of the risks they have

to face. There is special concern about this group of seafarers and the Minister should monitor the regulations in respect of them.
Thirdly, the Minister should give a commitment to agree that the regulations and the standards will be reviewed at some time in the future. On behalf of her Department she should give a commitment that a broad-based representative group of occupational health medical practitioners will undertake this review.

Mr. Donald Stewart: Has the National Union of Seamen given any thought of the flexibility of the rules in the Merchant Service? For example, one can understand that the rules would have to apply to an able seamen suffering from epilepsy, but would there be some discretion in allowing a man with this disability serving as a steward to go to sea?

Mr. Stott: The right hon. Gentleman has drawn attention to one of the anomalies of the regulations. I cannot answer his question. We shall have to await the Minister's response. A steward suffering from epilepsy could carry out his duties capably — provided that his captain was aware of the position—but he could not sail as an able seamen, as the right hon. Gentleman pointed out. This is where problems arise which hitherto have been overcome because the health regulations were not statutorily binding as they are now.
Fourthly, the Minister must ensure that her medical advisers maintain a close watch on all aspects of the regulations and on the way in which standards are applied, particularly with regard to those declared permanently unfit. It is highly desirable that the Department's own doctors assume full rather than titular responsibility for what is now a statutorily based set of medical standards. This can be done only on a week by week, day by day, surveillance of the regulations.
Fifthly, the Minister should ask the appointed medical referees and medical practitioners to draw the Department's attention to any unnecessary rigidity in the standards, whether in content or application. It cannot be stressed too strongly that the standards of required fitness are extremely high. Although the stresses and strains on seafarers serve to make this a contentious issue, it must be recognised that seafarers are vulnerable to being prematurely retired as a consequence of the regulations.
The Minister will be aware that I am sponsored by the Post Office Engineering Union. British Telecom has a fleet of cable-laying ships, on which POEU members serve, and have served, with distinction. They, too, are worried about the regulations. In many instances they have a dual role because, in addition to being seamen they are cable layers and cable jointers. All other members of the crew are involved during the cable-laying operations, working shift rotas to assist specific operations.
My union would prefer to see the continuation of a British Telecom in-house medical staff. Medical expertise within BT has been geared to the problems that occur on cable-laying ships. It is a special sort of work that gives rise to special medical needs.
I suggest that the regulations and a number of others could be brought within the remit of the Health and Safety at Sea Commission. It happens that the Department of Transport has the controlling interest under the regulations, but a supervising body, such as the commission, could have full responsibility for ensuring


that the regulations are implemented fairly and properly and not to the disadvantage of seafarers, which we believe could happen.
The Minister must recognise that the introduction of these regulations will be met with a lack of enthusiasm from those whom they are intended to help. They will be unpopular. The House has a right to demand of the Secretary of State, in the light of the clear unpopularity of the regulations, an assurance that he will monitor their operation and give a commitment that their application will be reviewed.
The Minister and the House know that the regulations are causing serious concern among seafarers, who do an extremely good job on behalf of the United Kingdom. They have done that in the past and they will continue to do so, but they want an assurance this evening that at a certain time of life they will not be made medically redundant because the medical profession wishes to adhere to regulations that are extremely onerous.
These are the questions that the Minister needs to answer. If she does not do so satisfactorily, the Opposition will divide the House.

Mr. Alfred Dubs: One of my constituents complained to me that, as a merchant seaman who suffers from epilepsy, he is unable to return to sea because he is debarred by the old medical provisions. I am not sure, having read these regulations and the appendix to the merchant shipping notice, whether they make any easier his task of returning to sea.
The regulations state:
Central nervous system. Any type of Epilepsy—a single epileptic fit—provided that the past med cal history is clear and investigation has shown no abnormality; re-entry could be considered after one year without any treatment.
I am also concerned that on an appeal against such a decision the applicant must pay £48 to be re-examined to establish his fitness to return to sea. This is another difficulty for a person such as my constituent who is unemployed. Will my constituent be able to return to sea or are these regulations insufficiently flexible to allow him to do so?

Mr. John Prescott: I declare an interest as a sponsored member of the National Union of Seamen. As an ex-seaman, I wish to put forward some arguments as to why the regulations are unacceptable. The Opposition must vote against the proposal unless the Minister is prepared to say that the charge of £48 will not be imposed. Although I was a seaman for 10 years, I would be unable to return to sea if I lost my parliamentary seat. Only a superman could return to sea having conformed with this proposal.
To understand the feelings of seamen about these regulations, we must understand their suspicions which are born of experience in the industry in the past 20 years, in particular the attitude of shipowners towards safety and welfare. The seamen are extremely suspicious of whether anyone will be open-handed about the proposed medical standards.
So incensed are seamen by the regulations that a full conference of the union took place which convinced them not to comply with the regulations in their present form. A collision course seems inevitable. The medical

standards in the regulations and in the maritime notices arise from the ILO conventions of 1946 and 1976. The National Union of Seamen, as an international union, has always encouraged the improvement of conditions via conventions.
The 1976 convention was accepted by the Labour Government in a White Paper. It makes it clear that there is concern about the ending of decasualisation in the shipping industry and about the need to advance the broad welfare demands of seafarers. In the past few years the industry has been slaughtered. The number of ships has fallen from about 1,600 to about 900 and it is expected to be halved again in the next few years, so decasualisation is very much a concern at present. Meanwhile, the other advances referred to in the conventions are not coming forward with the speed that the medical examinations show they warrant. On manning standards, the Government are actually encouraging reductions to keep crew costs down. That, too, is very much in the minds of seamen.
The medical examinations provided for in the conventions must be seen in their true preventive role. Their purpose is to recognise the medical problems arising out of seamen's conditions of work and to take action to prevent them. Maritime paper No. 1061 which is to be taken with the regulations recognises that seafaring is a hazardous occupation. That is true of all merchant navies. Statistics for accidents, sickness and mortality for seafarers of all countries are far higher than those for industrial occupations ashore.
That has been so for a long time. I recall writing evidence for the Pearson inquiry into the 1960 strike, about which politically motivated charges were hurled around the House. We made it clear at the time of the strike that the conditions of work and the accident and sickness rates had very much influenced that strike. Lord Pearson concluded that the accident and death rates in the shipping industry were deplorable. Yet they have increased since then and they doubled between 1975 and 1981.
The work done by Jack Kinnahan for the National Union of Seamen showed the same deplorable situation. The Minister looks doubtful. I will let her have the tables so that she can make the comparisons and assure herself that my arguments are based on fact. The accidental death rate for seamen is 25 times greater than that in manufacturing industry and four times greater than in mining, which is recognised to be the most dangerous occupation ashore.
Equally alarming for the seamen is the fact that, since the Health and Safety Commission took over accident rates in mining and manufacturing have fallen, but in shipping they have risen. In this context, it is interesting to note that there is no Health and Safety Commission to cover the shipping industry. Now that the responsiblity has passed from the Department of Trade to the Department of Transport, perhaps we shall see some real changes instead of civil servants working directly or indirectly for the employers. There is evidence, indeed, that a considerable number went to work for the shipping industry on leaving the Department of Trade.
Not only is the accident and death rate appalling. The industry is not in the vanguard in demanding safe gangways, safe clothing, eye guards where necessary. and so on, and safe manning levels. The industry has done nothing but obstruct advances of that kind. That is why the accident rate is so high.
I prepared the first paper on sickness and mortality for the Department of Trade in 1969 before I became a Member of the House. All the figures showed that mortality rates were higher for seamen than for workers in any other industry. Fifty per cent. of deaths at sea are due to disease, so more people die from disease than from death. [Interrruption.] I seem to have got that wrong. I meant that 50 per cent. of deaths at sea are due to disease rather than accident. That is a serious medical problem. We look to the industry to introduce preventive measures to help seamen in those difficult conditions. In some cases, it may be necessary to consider also preventive measures in terms of diet.
The Dreadnought hospital, which was built especially to deal with this type of medicine, is now in danger of closing. In so many areas, the emphasis is not on preventive medicine to help the seamen but on introducing measures which will lead to their being expelled from their jobs. Jack Kinnahan, a member of my union, gave much evidence to support that.
Seamen are sceptical when the industry says that the proposed medical standards should be enforced. We wonder about the industry's motive. We are worried when the industry says that it is concerned about our interests because it asked for and received exclusion from the Redundancy Payments Acts of the 1960s. That meant that, while standards were better on paper, seamen who signed off the ship never did two years' service and were never able to claim redundancy pay. The industry then told seamen that they were no longer redundant but did not pass its medical standards, so they were removed from the industry. The industry saved millions of pounds in that way. Indeed, the industry is now lobbying for changes to the Redundancy Payments Acts because thousands of seafarers are being made redundant—which is expensive — so it wants to change the law again so that the Government will provide the money. Shipowners have never given anything for nothing. They will always exact their price, and seamen are well aware of it.
It is a hazardous industry in which there is little preventive medicine. I do not believe that medical examinations have changed much since I went to sea. The doctor told the prospective seaman to drop his trousers, and the examination was complete. Perhaps it is a little better now, but there is still little emphasis on preventive medicine. It is hardly surprising, therefore, that seamen are wary when the industry says that it wants to look after their interests.
As the Minister comes from Merseyside, she probably knows about seamen's complaints abut the way in which the industry has implemented standards in the past. There is apprehension about making such standards statutorily enforceable and for it to be a crime not to have a medical certificate. I should like to quote from document M1061 about why it is necessary to have these standards. It says:
It would be unsafe practice to allow seafaring in any known medical condition where the possibility of serious exacerbation requiring expert treatment could occur as a calculated risk.
I understand the problems of allowing people to go away to sea if it is not possible to give them medical attention. It is good sense to prevent ill-health. Medical provision varies. Some liners are equipped with surgeons, doctors and a mass of facilities, whereas others have no doctors but simply someone with a medical book.
While the shipping industry's doctors have one idea of the standards, the Department's doctors want more flexibility built into the system. Our being faced with the regulations now means that the Department must have lost. The industry is imposing the standards and the conditions whereby a seaman can be expelled. We have often contested the industry's medical advice after discussions with consultants, but our suggestions have been rejected.
A letter in The Seaman by Dr. Buckland of Grimsby makes it clear that some of the reasons for expulsion from the shipping industry under the M notice procedure are utterly unacceptable. He is another medical authority who gives considerable evidence, and questions the reasons for expulsion under the M notice procedure.
I noticed that loss of hearing has been given as a reason for a seaman being denied employment in the shipping industry. In 1969, I called for special preventive medicine for lads working in engine rooms who were losing their hearing because they were subjected to concentrated noise as a result of new technology in engines. We did not achieve testing to find out if the men were losing their hearing. It is possible to remove such men from the engine room and give them paid leave ashore and their hearing will return to normal. However, the industry did nothing about that. It simply said, "You have lost your hearing and now you can be expelled." If we continue to have the standards embodied in that document, we shall face similar problems in future.
The document also states that if a seaman is more than 20 per cent. overweight he can no longer go to sea. Goodness knows what would happen to Members of this House, including me. As for female seafarers, the document states:
Employment at sea shall not be permitted during the term of pregnancy.
That means that female seafarers cannot get the full-time work that would entitle them to get benefits, so not only are they kicked out of the industry but they are denied benefits.
Another example is standards of eyesight. The document states:
Where different visual aids are used for distant and near vision, a spare pair of each must be carried.
Presumably a seaman must carry four pairs of glasses before he can go to sea. That must cost about £100 to £200, and who pays for it? That penalises people in their chosen occupation. On reading the regulations, one begins to believe that they have been proposed simply to make it easier to expel people from the industry, not through redundancy but on medical grounds.
My hon. Friend mentioned exemptions. Maritime notice 1078 states that exemptions can be made for those who go away to sea but who are not directly concerned with the ship. That means that a hairdresser or a shop girl, who may be diabetic, or have epilepsy or heart trouble, need not have a medical examination, but that the assistant steward who looks after them must have one. If he does not, he can be expelled from the industry. He will be especially aggrieved about the fact that there appears to be one law for him and another for the hairdresser or shop girl. An exemption may also be given for foreign seamen. M1078 states that Liberia can give medical certificates. Liberia will sell manning certificates to anyone who wishes to buy them, so medical certificates will be no


problem. Liberia loses four times as many ships as does Britain because of the incompetence of her certificated seamen.
Maritime notice 1078 also states that when one applies for a medical certificate, it can be done individually but that normally the company will apply for it, and that the company will pay £14. Many companies will shove that expense directly on to the seaman, especially if he does not belong to a federated service. The company will say, "If you have £14 to pay for a medical certificate, we will employ you, but if you do not have it, we will take someone else because there are thousands of unemployed seamen." That will penalise the seaman looking for a job. Section 10 provides that men aged 18 must have a yearly examination, so the heaviest costs will be placed on the lads who have the lowest income to deal with it. That is a further injustice.
My hon. Friend mentioned the appeals system. One can appeal against a decision of the medical authorities that one is no longer fit to go to sea. The right of appeal is written into the convention, and is an international obligation to which the House has agreed. However, today rights must be paid for. They do not come simply because one is a seaman, so if someone wishes to appeal against the medical standards imposed upon him—with which some authorities disagree — he must appeal to the Department of Transport. We fully agree that there should be an independent appeal tribunal, and we recognise that the Department is independent of the industry. It means that the state has a say about medical standards and does not have a vested interest in the matter. Unfortunately, it has not faced up to that obligation and has allowed the industry to dictate the standards required.
That being so, a seaman now has to send £48 with his application for an appeal. The regulations do not state that the seaman should pay the money, but his appeal cannot be heard unless he sends £48. In effect, a seaman who wants to appeal against a medical decision will now have to pay £48. That would not be expected in the national insurance system. If someone is denied a benefit, he is entitled to a free medical appeal, and he does not have to pay for it. Why should the seaman have to pay £48? He is supposed to have a right to appeal, but that right is denied because a charge is made.
In the past few years 400 seaman have left the industry for medical reasons. Only 60 of them elected to appeal and not many of the appeals were successful. At the moment the appeal does not cost anything; the charge is a new one. From experience when there was no charge, we can assume that the seamen, when not deterred by having to pay a charge, appealed because they wanted to do so. If there were only 400, the total cost involved is £3,000. That is not a lot of money. The Government should make it plain that the obligation should fall either on them or on the industry, and that, in any event, it should not be placed on the seaman.
When the seamen sees the regulations, he wonders why he should be treated differently. We have been told that the charge is a deterrent. It is designed to deter a person with no legs or no arms from wasting the time of the appeal board. But, according to the convention , any seaman has a right to appeal. We are attaching a charge to that right and that obligation.
One point in particular that incenses the seamen. A few weeks ago the Health and Safety (Fees for Medical Examination) Regulations 1983 came before the House. In

that case, if the health and safety executive wants to examine a man to find out whether, for example, he has lead in his blood because the nature of his occupation, Parliament has stated that the employer shall pay a charge of £19. Parliament did not say that it was the worker who had the obligation to pay. We said that the employer should pay the charge, because conditions in the industry were involved. It is interesting, incidentally, that when the employee pays, the charge is £48, but when the employer pays, the charge is £19. That is an interesting example of discrimination. The seamen see Parliament passing that legislation one day, and charging the seamen £48 on the following day.
It is not clear from the regulations that the seaman has any right to see the referee who is to make the decision. Even if he pays the £48, he has no guarantee that he will see the doctor who is to pass judgment on him. That is the least that we should guarantee him, whether he is charged or not, but it is not made clear anywhere in the regulations.
The seamen feel that there are many more questions to be answered. The Government were asked to put off introducing the regulations until further consideration could be given to them by the Department. As there is a new Department, I should have thought that that could have been done. But the regulations were pushed through during the election. One of the more favourable results of the election was that Mr. Sproat, who represented Aberdeen, South, lost his seat. He had provided much of the impetus behind the regulations. I hope that the hon. Lady will remember the fate of two hon. Members involved in fights with the seamen. Mr. Sproat is no longer here and the hon. Member for Weston-super-Mare (Mr. Wiggin), who tried to sell off our ships to the Royal Navy, is no longer in the Government.
This is the third fight, and this fight is with the Department of Transport. I hope that the Department will give serious consideration to the fears of the seamen, who have a legitimate grievance. I hope that the hon. Lady will tell us that she will reconsider the regulations, even though they are in force. If she is not prepared to do that, the only thing that we can do is vote against them.

Dr. David Clark: I support strongly what my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has made clear to the House. I represent a constituency which includes many thousands of seamen, and I know very well the depth and extent of feeling among the seamen about the regulations.
I shall not deal with the medical appeal fees or the medical hearing. My hon. Friends the Members for Wigan (Mr. Stott) and for Kingston upon Hull, East have deal with them in detail.
Seafaring is hazardous. The other major occupation in my constituency is mining. I know at close hand the accident rate in both industries. We tend to forget how dangerous seafaring is. The men earn their livelihood in difficult conditions and they are the first to accept :hat they must be of a sufficient medical standard. A man who is not up to the mark places a risk on his companions.
The whole background of employment in shipping does not give the men confidence in the regulations. If I were asked who comprised the most unpatriotic group of people in Britain, I would say the ship owners. They have no respect for the British flag, and they have a reprehensible


record when it comes to ship building and repairing. If they can get work done for 0·5 per cent. less overseas, they will willingly take it abroad.
In the past four years there has been a drastic reduction in the size of the British merchant fleet and, therefore, in the number of seamen. Their great fear is that these regulations may be a way of creating further massive redundancies in the industry. As my hon. Friend the Member for Kingston upon Hull, East said, it would have been appropriate for the new Department to show good will by withdrawing the regulations. However, we accept that they are already in operation, so all we can do now is to vote against them.
The Minister could at least acknowledge that there is medical disagreement about the regulations. It would help if we could have certain assurances. For example, will the Minister make it clear that the Government will oppose any efforts by the employers to use the regulations as an excuse to make more men redundant? Will all unfitness cases be reviewed by the Department's doctors? Is the Minister prepared to devise a system by which cases which the union considers to have been dealt with particularly harshly can be reviewed?
Will the operation of the regulations be monitored so that, in two or three years, if the international convention has not been working properly, the necessary alterations can be made? Assurances along those lines would help to persuade the seamen that the Government are not providing just another method of creating more redundancies in the industry.

Dr. M. S. Miller: Considering that the Conservatives have been saying over the years that they do not like interfering in procedures that have been in operation for many years and are against too much legislation, I wonder why all of a sudden this mass of complicated procedure has been initiated. Perhaps it is because the Government want to provide more work for the medical profession, which is well enough paid already. Or could it be because the Minister kept saying during the election campaign that there were far too many British seamen and that a method had to be found to get rid of them?
I spent 20 years examining seamen in the port of Glasgow. I found all kinds of conditions. They were treated. They went to sea. They had no difficulty. I was on board ships every day during those 20 years. I see no reason why this complicated procedure should be institutionalised in the way that it is in the regulations.
When I studied some of the conditions detailed in merchant shipping notice No. M 1061 I wondered where the Department obtained its information. Where does it obtain the information about the gastro-intestinal system? It says:
Cimetidine maintenance therapy. The duodenal ulceration relapse rate while on treatment is too high for safe seafaring.
The relapse rate after one or two courses of cimetidine is low. The incidence of duodenal or gastric ulcer perforating on cimetidine therapy is also low. The number of stomach operations has been reduced dramatically by this form of treatment.
Similarly with pulmonary tuberculosis—I understand that one does not send a man to sea if he has TB. The document states that.
Most cases are unsuitable for further seafaring but if the examining doctor is satisfied that the lesion is firmly healed, the radiological appearance is acceptable and the patient has completed a full course of chemotherapy, re-entry might be considered.
I bet that most of the older Members of Parliament sitting here this evening will have healed tuberculous lesions in their lungs. No one says that we are unfit to sit in Parliament — [Interruption.] Perhaps some people say that we are. However, no regulations apply to us and say that we might, perhaps, be reconsidered by our constituents for an election campaign. That is a ridiculous statement. I have come to the conclusion, in complete agreement with my hon. Friends, that there is a sinister motive here. Why is there all this palaver? Why should all this be necessary?
I do not pay the slightest attention to the stupid list contained in appendix 1 of countries whose certificates are acceptable for these regulations. I have never read anything so ridiculous in my life — Algeria, Greece, Guinea-Bissau, Costa Rica, Papua-New Guinea and Liberia. I am sure that for a small bowl of rice a certificate will be granted easily by witch doctors or some of the doctors in those areas.
I believe that an attempt is being made to reduce the number of seamen. As regards the price of the medical certificates, my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) was right to tell the House that the seamen, whom he knows well from years of experience, are up in arms against this charge.
I support my hon. Friends strongly in opposing these regulations.

Several Hon. Members: rose—

Mr. Deputy Speaker (Mr. Harold Walker): I remind the House that Standing Orders require that the debate be concluded not later than 11.30 pm. I am sure that the House would wish the Minister to reply.

Mr. Terry Fields: As has already been said, the Opposition's aim is higher standards of medical monitoring. I have some experience as a fireman. In the 1960s, medical examinations for firemen over 40 years of age were accepted by the union. There was strict monitoring. With the involvement of the Department, the area health authority, underastanding the nature of the tasks carried out by the firemen, carefully monitored the examinations.
The same should apply to the seamen. They have more of an affinity with water than the fire services. The maritime industry and those who work in it need to be assured that the regulations are in the best interests of the industry. No financial barriers should be put in the way of maintaining the highest standards for seamen.
Time is against me. I associate myself with my hon. Friends' remarks. If the regulations are to be used as a device for making seamen redundant, in no way can the Opposition accept them in their present form.

The Under-Secretary of State for Transport (Mrs. Lynda Chalker): I cannot turn the clock back. I thank the hon. Member for Wigan (Mr. Stott) for his welcome, but


he knows as well as I do that the regulations are an inheritance and not exactly in my plan of action. Although not able to turn the clock back, I want to consider some of the things that have been said in the debate. I want to look forward. There are many seafarers in my constituency. It will not surprise hon. Members on either side of the House to know that my hon. Friend the Member for Wirral, West (Mr. Hunt) and I have represented the interests of seafarers in just such cases as have been mentioned tonight. when they have become sick, have had to face medicals in the past and so on
Therefore, I approach the matter from a slightly unusual stance. However, these regulations are necessary. At the back of what was said by Opposition Members is an acceptance that we have to have medical standards because those serving on the deck and those in charge of the ship must be able to carry that ship safely through the waters on its mission. There are difficulties from time to time. There have been over many years. We are now making the regulations so that the United Kingdom can meet its international obligations. They arise from the ratification of the International Labour Organisation convention No. 147, "Minimum Standards in Merchant-Ships". It was composed at the 62nd maritime session of the ILO in 1976 following the return of the United Kingdom tripartite delegation. The Government of the day, supported by Opposition Members, announced their intention of ratifying the convention in Cmnd. 7163, when they were satisfied that all shipboard conditions of employment were in every case covered by laws and regulations or by collective agreements.
One facet of the employment of seafarers is the requirement that they should all be medically fit and issued with certificates to attest to that fact. The requirement was first enunciated by the ILO in the drafting of convention No. 73 covering the medical examination of seafarers in 1946. In this country, the Government, of either party, have never been able to ratify the convention because it was considered too restrictive in a number of respects, notably the frequency that examinations were required and the relatively small number of vessels to which it applied. Eventually, through much negotiation the ILO came to appreciate that, although the principles underlying the convention were widely accepted, in many countries, including the United Kingdom, there were practical problems in its implementation. Perhaps that is why it has taken so long to reach this stage with the Merchant Shipping (Medical Examinations) Regulations 1983 which apply to all seagoing vessels that are not small ships, of under 1,600 tonnes. I shall come back to the point made by the hon. Member for Battersea (Mr. Dubs).
The United Kingdom law is now substantially equivalent to the international convention. It meets the obligations as well as exercises the privileges conferred by the ratification of ILO No. 147. I do rot think that there is any difference of opinion between the two sides of the House about the fact that seafarers' health is most important. It is common ground that the convention is a significant weapon in retaining a viable British merchant fleet, not only because it sets minimum standards for the vessels from the states that have ratified it but because it gives those countries the right to inspect ships of other nations that visit its ports and to report any failure to meet the standards of the convention or in extreme cases—where there is an identifiable risk, for instance, to the

safety of the vessel or the health of those on board—even to detain a ship until the shortcomings have been rectified.
I am sure that the House will agree that it is likely to be the most effective way in which we can protect the British merchant fleet from the unfair competition posed by those nations whose ships are manned by inadequate crews or with non-existent standards of safety and hygiene. If we are to derive the benefits of the convention, we have to accept it. That is what brings us to this point tonight and to the regulations which were laid in May by my former colleague, Mr. lain Sproat who was then the hon. Member for Aberdeen, South.
It has been said tonight that there was no consultation about the regulations, so why proceed? I have to say—as the hon. Member for Kingston upon Hull, East (Mr. Prescott) knows — that there were consultations. In digging around to see what has been going on over the last three years or more, I find that originally there seemed to be quite wide acceptance of what was involved, and then gradually the doubts crept in. Those doubts vary but in the main there are doubts about the rigidity of the medical standard. That was the point made by the hon. Member for East Kilbride (Dr. Miller). The doubts come from six unions. Although some of those unions, including the Post Office Engineering Union, originally seemed to be satisfied, of late a change of heart on the part of all the unions has been noticed.
Let us consider what the medical standards mean. They are not part of the regulation but part of the Merchant Shipping Notice No. 1061. Standards are necessary because we cannot limit the number of doctors if we are to have examinations readily available to merchant seamen. Therefore, we must have standards to apply. and here I hope I may be able to help Labour Members.
There are doctors in companies with their own shipping fleets—for example, some of the large oil companies and others. There are doctors in the employ of the General Council of British Shipping. There are also doctors who work for non-federated shipping companies. They must be working to the same standards as nearly as they can. That is why a group of standards has been arrived at— originally, I understand, with the support of the medical representative of the National Union of Seamen and the Merchant Navy and Airline Officers' Association and others—that seem to be right for the industry. As I said, some of the unions have now changed their minds. Nevertheless, the standards in the associated document have been discussed quite thoroughly.
We are also publishing the names of the doctors who will be carrying out the examinations in the Merchant Shipping Notice No. 1078. Therefore, there is no doubt who will be there to conduct the first-stage examination.
I know that there is some monitoring taking place among company doctors, particularly of standards of seafaring medicals. I have been asked tonight for an undertaking that we will monitor what is going on in the conduct of seafarers' medical examinations. I assure the House that a very keen interest will be taken if the regulations are accepted and the prayer is declined by the House. We shall look at the standards and at what is going on. I shall return to that point in a few moments.
If there is a failure and a seaman decides to appeal, the doctor to whom he appeals will be independently appointed by my right hon. Friend the Secretary of State. We wish to restrict the number of doctors doing appeals


to those who are accredited specialists of the Society of Occupational Medicine, because we believe that their experience is the sort that should be available to any case going to appeal. It would be worthwhile if they have also been to sea, and we hope to incorporate that as well. There may not be enough people with the dual role to fulfil the numbers that we need, and we shall have to see about that over time.
Hon. Members have talked about preventive medicine, and as the House is aware, I have been involved peripherally, not as a non-medical practitioner, but as an interested party, for many years. We need improved statistics about medical ill health at sea, and I should want to examine the collection of statistics about sea accidents, and whether that is possible. We now have an opportunity, as the result of the regulations, which was not available before.
Hon. Members also spoke about the rigidity of these regulations, particularly the hon. Member for East Kilbride, who is a medical practitioner. I hinted that M 1061 is not part of the regulations, and the debate shows that there is unhappiness about it. As it is not part of the regulations, it can be amended, and I give a firm undertaking that the Department of Transport, which takes on this responsibility for the first time, will monitor whether the regulations are too rigid. The hon. Member for Kingston upon Hull, East was right to say that there had been advice in Government circles about more flexible regulations. Any medical practitioner looking at the regulations, as the hon. Member for East Kilbride did, will know that there are treatments — which were not previously available for certain illness — that might enable a man to pursue his career at sea for longer than was previously possible. That must be examined in the light of the working practice. The hon. Member for South Shields (Dr. Clark) asked for a two or three-year review, but I hope that we can have a good look at this at the end of one year —I would not put it as far away as the hon. Member for South Shields.
Cases that go to appeal may need laboratory investigations, and in reviewing the standards, it is important that we use laboratory investigations on borderline cases. Provision has been made for this in the regulations under the re-organisation that is being set up. The medical referees who are hearing the appeals have been authorised to commission outside clinical tests if these are considered necessary in the appeal cases. The hon. Member for Kingston upon Hull, East made a point about the health and safety regulation 174. This was news to me, and I shall ask the Department to investigate it. It is strange that in one set of fairly similar regulations, the charge is placed on the employers, and it has always been acceptable that the Government would not bear the cost of the appeal cases. However, in these regulations, it has never been formally decided who bore the cost.
Much has been made tonight of the cost of going to appeal in those cases. Having been a Minister in the Department of Health and Social Security, one understands about medical appeal cases and what goes with them. I cannot give the House any undertaking that I shall wave a magic wand and change things tonight, and Labour Members know that. There is a problem for a few people, but the iniquity of requiring a seafarer who has been refused a certificate of fitness to pay the cost is not

as bad as hon. Members have made out. I had anticipated that point being made in the debate tonight. I cannot believe that personal applications should always be paid for out of public funds, but if it proves to be a problem, there may need to be a re-think within the industry about the bearing of the cost of appeals. I ask Labour Members to leave this for further consideration, because it is not a matter than can be solved in debate, and not—

Mr. Eddie Loyden: rose—

Mrs Chalker: I have six minutes left and many questions to answer. I shall try to get through them, and if there is a second left I shall give way to the hon. Gentleman.
In carrying out the initial medical examinations I should expect all medical practitioners listed to undertake their duties seriously. I hope that a larger proportion of them will take the further training in occupational medicine offered by the Royal College of Physicians. Then eventually we shall reduce the need for appeal. That is important.
Hon. Members asked about foreign ships and foreign crews on United Kingdom ships. The regulations require the crews of foreign ships to carry certificates attesting to medical fitness. That will be an important improvement. Hon. Members laughed when it was said that certificates could be bought. I hope that the international convention, which is binding on all the nations that sign it, will ensure that that will not happen in future. Until an international convention is ratified in a number of countries there is no hope of wiping out the wrongs that have occurred in some places. That is why we are keen to proceed.
Non-domiciled seafarers on United Kingdom ships are required by the regulations to be examined and passed as fit by an approved United Kingdom doctor, or to have a medical fitness certificate issued in another country which has ratified the convention or in a non-convention country which is known to have an acceptable and properly constituted medical examination system for seafarers. We have sought to provide for the circumstances about which hon. Members have asked.
I was asked about ships of less than 1,600 tonnes. As part of the international maritime convention, bearing in mind the standards of training certification and watchkeeping, in the next few years we shall examine the regulations which give rise to the need to extend medicals to some on board. The medicals are designed for deck hands and engine hands, who guard the safe passage of the ship. Discussions about exemption from medicals do not apply to people in charge of running the ship. In the next few years, some ships of less than 1,600 tonnes will be included. That is a matter for further discussion on which the Department welcomes representations.
The hon. Member for Wigan asked about medical standards. I hope that I have given him the assurances that he sought. We shall keep a close watch on standards. If a man is declared permanently unfit and the case goes to appeal, clear monitoring will take place. The reports by referees appointed by the Secretary of State will be considered carefully by the Department, particularly in the first crucial year.
We shall obviously monitor age, because that can be an important factor in relation to some of the specified illnesses. Now that severance pay is available on a par with redundancy pay to those who are medically unfit, no-one


can accuse the Government of introducing the regulations to aid the slimming down of the shipping industry. That is certainly not so.
The hon. Gentleman also asked about the seafarers' concern for the medical profession. I hope that what I have had to say about the involvement of the Royal College of Physicians and the Society of Occupational Medicine will reassure him that we are going down a positive path and looking at what is necessary for the future safety of those who sail our ships.
I commend the regulations to the House and ask hon. Members to reject the prayer. I should tell the hon. Member for Battersea (Mr. Dubs) that, because of the wording in paragraph 11 of merchant shipping notice M1061, his constituent would not benefit because his epilepsy was obviously controlled by drugs and the regulation specifies "without any treatment".
I hope that the House will approve the regulations with my assurance that they will be most carefully monitored and reviewed in a year.

Question put:

The House divided: Ayes 90, Noes 202.

Division No. 11]
[11.30 pm


AYES


Barron, Kevin
Haynes, Frank


Bell, Stuart
Hughes, Mark (Durham)


Bennett, A. (Dent'n &amp; Red'sh)
Hughes, Robert (Aberdeen N)


Bermingham, Gerald
Hughes, Sean (Knowsley S)


Blair, Anthony
Litherland, Robert


Boyes, Roland
Lloyd, Anthony (Stretford)


Bray, Dr Jeremy
Lofthouse, Geoffrey


Brown, Gordon (D'f'mline E)
Loyden, Edward


Brown, N. (N'c'tle-u-Tyne E)
McCartney, Hugh


Brown, R. (N'c'tle-u-Tyne)
McDonald, Dr Oonagh


Brown, Ron (E'burgh, Leith)
McKelvey, William


Caborn, Richard
McWilliam, John


Callaghan, Rt. Hon. J.
Madden, Max


Callaghan, Jim (Heyw'd &amp; M)
Michie, William


Campbell-Savours, Dale
Mikardo, Ian


Clark, Dr David (S Shields)
Miller, Dr M. S. (E. Kilbride)


Clay, Robert
Nellist, David


Cocks, Rt Hon M. (Bristol S.)
O'Brien, William


Cohen, Harry
O'Neill, Martin


Corbett, Robin
Parry Robert


Corbyn, Jeremy
Pike, Peter


Cowans, Harry
Powell, Raymond (Ogmore)


Crowther, Stan
Prescott, John


Cunliffe, Lawrence
Randall, Stuart


Dalyell, Tarn
Redmond M.


Davies, Rt. Hon. Denzil (L'lli)

Richardson, Jo


Davies, Ronald (Caerphilly)
Robinson, G. (Coventry NW)


Deakins, Eric
Ross, Ernest (Dundee W)


Dixon, Donald
Sedgemore, Brian


Dormand, Jack
Skinner, Dennis


Dubs, Alfred
Smith, C.(lsl'ton S &amp; F'bury)


Duffy. A. E. P.
Smith, Rt Hon J. (M'KI'ds E)


Eastham, Ken
Spearing, Nigel


Evans, John (St. Helens N)
Stewart, Fit Hon D. (W Isles)


Ewing, Harry
Stott, Roger


Fatchett, Derek

Strang, Gavin


Fields, T. (L'pool Broad Gn)
Straw, Jack


Fisher, Mark
Thorne, Stan (Preston)


Flannery, Martin
Tinn, Jamas


Foster, Derek
Wardell, Gareth (Gower)


Freeman, Roger
Wareing, Robert


George, Bruce
Wilson, Gordon


Godman, Norman
Winnick, David


Golding, John



Gould, Bryan
Tellers for the Ayes:


Hardy, Peter
Mr. Allen McKay and


Harrison, Rt Hon Walter
Mr. James Hamilton.





NOES


Alexander, Richard
Harvey, Robert


Alton, David
Hawkins, C. (High Peak)


Amess, David
Hawkins, Sir Paul (N'folk.SW)


Arnold, Tom
Hawksley, Warren


Ashby, David
Heathcoat-Amory, David


Aspinwall, Jack
Heddle, John


Atkinson, David (B'm'th E)
Hickmet, Richard


Baker, Nicholas (Dorset N)
Hind, Kenneth


Batiste, Spencer
Holland, Sir Philip (Gedling)



Beith, A. J.
Holt, Richard


Bellingham, Henry
Howarth, Alan (Stratf'd-on-A)


Biggs-Davison, Sir John
Howell, Ralph (Norfolk N)


Blackburn, John
Howells, Geraint


Blaker, Rt Hon Peter
Hubbard-Miles, Peter


Boscawen, Hon Robert
Hughes, Simon (Southwark)


Bottomley, Peter
Hunt, David (Wirral)


Bowden, Gerald (Dulwich)
Hunter, Andrew


Boyson, Dr Rhodes
Johnson-Smith, Sir Geoffrey


Braine, Sir Bernard
Jones, Gwilym (Cardiff N)


Brandon-Bravo, Martin
Kershaw, Sir Anthony


Brinton, Tim
Key, Robert


Brooke, Hon Peter
King, Rt Hon Tom


Brown, M. (Brigg &amp; Cl'thpes)
Kirkwood, Archibald


Browne, John
Knight, Gregory (Derby N)


Bruce, Malcolm
Knowles, Michael


Bruinvels, Peter
Knox, David


Bryan, Sir Paul
Lang, Ian


Buck, Sir Antony
Latham, Michael


Bulmer, Esmond
Lawler, Geoffrey


Burt, Alistair
Lee, John (Pendle)


Butterfill, John
Lester, Jim


Carlisle, John (Luton N)
Lilley, Peter


Carlisle, Kenneth (Lincoln)
Lord, Michael


Carttiss, Michael
Lyell, Nicholas


Chalker, Mrs. Lynda
McCurley, Mrs Anna


Channon, Rt Hon Paul
McNair-Wilson, M. (N'bury)


Chapman, Sydney
Major, John


Chope, Christopher
Malone, Gerald


Clark, Hon A. (Plym'th S'n)
Maples, John


Clarke Kenneth (Rushcliffe)
Mather, Carol


Cockeram, Eric
Maude, Francis


Conway, Derek
Meadowcroft, Michael


Coombs, Simon
Merchant, Piers


Cope, John
Meyer, Sir Anthony


Couchman, James
Miller, Hal (B'grove)


Currie, Mrs. Edwina
Mills, Iain (Meriden)


Dicks, T.
Moate, Roger


Dorrell, Stephen
Montgomery, Fergus


Douglas-Hamilton, Lord J.
Moynihan, Hon C.


Dover, Denshore
Murphy, Christopher


Dunn, Robert
Neale, Gerrard


Dykes, Hugh
Neubert, Michael


Evennett, David
Newton, Tony


Eyre, Reginald
Nicholls, Patrick


Fallon, Michael
Norris, Steven


Favell, Anthony
Onslow, Cranley


Fenner, Mrs. Peggy
Oppenheim, Philip


Forman, Nigel
Osborn, Sir John


Forsyth, Michael (Stirling)
Ottaway, Richard


Forth, Eric
Page, Richard (Herts, SW)


Fox, Marcus
Patten, John (Oxford)


Franks, Cecil
Penhaligon, David


Fraser, Peter (Angus East)
Pink, R. Bonner


Freeman, Roger
Powell, William (Corby)


Gale, Roger
Powley, John


Galley, Roy
Prentice, Rt Hon Reg


Gardiner, George (Reigate)
Price, Sir David


Garel-Jones, Tristan
Proctor, K. Harvey


Goodhart, Sir Philip
Raffan, Keith


Goodlad, Alastair
Rhodes James, Robert


Gow, Ian
Rhys Williams, Sir Brandon


Griffiths, Peter (Portsm'th N)
Ridsdale, Sir Julian


Ground, Patrick
Robinson, Mark (N'port W)


Gummer, John Selwyn
Rowe, Andrew


Hamilton, Hon A. (Epsom)
Ryder, Richard


Hamilton, Neil (Tatton)
Sayeed, Jonathan



Hampson, Dr Keith
Shaw, Sir Michael (Scarb')


Hanley, Jeremy
Shelton, William (Streatham)


Hargreaves, Kenneth
Shersby, Michael






Silvester, Fred
Twinn, Dr Ian


Skeet, T. H. H.
van Straubenzee, Sir W.


Smith, Tim (Beaconsfield)
Viggers, Peter


Soames, Hon Nicholas
Waddington, David


Speed, Keith
Wakeham, Rt Hon John


Speller, Tony
Walden, George


Spence, John
Wall, Sir Patrick


Spencer, D.
Waller, Gary


Spicer, Michael (Worcs, S)
Wardle, C. (Bexhill)


Stanbrook, Ivor
Warren, Kenneth


Steen, Anthony
Watson, John


Stern, Michael
Watts, John


Stevens, Lewis (Nuneaton)
Wells, Bowen (Hertford)


Stevens, Martin (Fulham)
Whitfield, John


Stewart, Andrew (Sherwood)
Whitney, Raymond


Stradling Thomas, J.
Wilkinson, John


Taylor, John (Solihull)
Wolfson, Mark


Temple-Morris, Peter
Wood, Timothy


Terlezki, Stefan
Woodcock, Michael


Thomas, Rt Hon Peter
Yeo, Tim


Thompson, Donald (Calder V)
Young, Sir George (Acton)


Thompson, Patrick (N'ich, N)



Thorne, Neil (Ilford, S)
Tellers for the Noes:


Thurnham, Peter
Mr. Douglas Hogg and


Tracey, Richard
Mr. Tim Sainsbury.

Question accordingly negatived.

Queen's Park Hospital, Blackburn

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]

Mr. Jack Straw: The debate is about the capital building programme for the Queen's Park hospital, Blackburn. I emphasise that the programme affects all the people in the Blackburn, Hyndburn and Ribble valley constituencies and boroughs. I am glad to see the hon. Member for Hyndburn (Mr. Hargreaves) in his place. There is concern in Accrington about the future of the Accrington Victoria hospital and its relationship with the main hospitals in Blackburn, but, as I believe the hon. Member for Hyndburn will say, there is unanimity of view throughout the district health authority area that the rebuilding of parts of Queen's Park hospital and the implementation of new facilities for child health must take place urgently.
Queen's Park hospital and the Blackburn Royal infirmary provide the district general hospital services for the district health authority area. Facilities exist at Queen's Park hospital for medical, psychiatric, geriatric, maternity and paediatric services. The buildings at Queen's Park hospital were formed from the old Blackburn workhouse and need to be rebuilt. The site suffers from being on a slope; it is high up and windy. The need to rebuild was recognised by the regional health authority many years ago, and that led to the preparation of a four-phase capital building programme. Phase 1 was to be the paediatric unit; phase 2, the geriatric unit; phase 3, the maternity unit and phase 4 was to be the unit for the mentally ill.
In 1980–81 the health authority proposed that work on the paediatric unit should begin in October 1981, on the geriatric unit in 1983, on the maternity unit in December 1984 and on the mental illness unit in 1986.
The rebuilding of the paediatric and child care units came first as the need there was the greatest. The children's wards at Queen's Park hospital are appalling. Ward CH3 can accurately be described as a shed.
Should the Minister have thought that I might exaggerate the position, I sent him a collection of photographs showing the cramped and inadequate facilities used to treat the sick children of Blackburn, Hyndburn, Rossendale and the Ribble valley. I hope that those photographs confirm to the Minister the view of the medical members of the technical advisory group on child health which, as long ago as 1969, when they visited the hospital, said that ward CH3 at Queen's Park hospital should not be used for the care of children.
Twelve years later the paediatric consultants, in a submission to the health authority, listed eight major problems with the facilities. They said:
The main Paediatric Ward … at Queen's Park Hospital is totally isolated and lacks any connection other than transport to necessary supporting medical services. All Children who (some of them being critically ill) require x-rays have to be taken to the x-ray Department by ambulance … The ward design of CH3 is such that it does not allow flexible use of the available bed space. The indoor play facilities for children are totally lacking. The main ward is used for nursing children, for play and also for providing a makeshift dining room. There is no provision for piped oxygen or suction on ward CH3. The treatment room is so small that it can barely accommodate more than two people at a time. There are no facilities for parents, such as a waiting room or a quiet room for parents to retire, especially when they have a critically ill child in hospital. All day-case investigations are


being carried out in the main ward area, thus disrupting the smooth running of the ward … The school-room is totally inadequate as it is such a small room.
When it became apparent in 1980 that the starting date for phase 1 and the later phases for the maternity and geriatric units had slipped, many representations were made. The then Minister for Health, the hon. Member for Reading, East (Dr. Vaughan) visited the hospital on 13 June 1980. Subsequently, the Minister wrote to me saying that phase 3—the maternity unit—was to be included in the RHA's capital programme for 1984–85. That letter carried the clear implication that the earlier phases would begin before then.
The regional health authority confirmed this in a letter to the consultants. It stated:
As regards the scheme's timing, the current anticipated start date is March 1983 … Based on these target dates the Unit should become operational in September .1985.
I visited the hospital again in March this year and was horrified to learn not only that phase I was not to begin in March this year but that the approval in principle submission had not been formally male to the Minister.
I then wrote to the chairman of the health authority. He replied on 26 April telling me that
Minor technical delays have occurred in the first phase of development … but these have now been overcome … It is possible, therefore, that both Phase I and Phase III may be delayed to some extent, although it is hoped that a start will be made on the earlier phase before the end of the current financial year.
He went on to say that the first two sections of the approval in principle submission had been made to the Department on 23 March.
I thought that as a result of my representations and that letter the building would at least go ahead before the end of this financial year, but on 24 May I learned to my horror that it was to be recommended that phase I should be dropped altogether from the capital building programme for this year and that there was no guarantee that it would be included in the programme for next year or the following year.
Following representations from me, the regional health authority instructed the capital programme panel at its meeting on 24 May to re-examine the schemes. At the regional health authority meeting on 28 June, however, it was finally decided that the scheme would not go ahead this year, and there was no guarantee that it would be included in next year's programme.
I appreciate that the regional health authority makes decisions within the overall capital allocation provided by the Government, but I have called for this debate and a reply from the Minister for three reasons. First, the regional health authority is a creature of the Secretary of State. Secondly, the Secretary of State is responsible for the financing of the health authority. Thirdly, the Secretary of State is ultimately responsible for the good administration of health authorities.
I realise that there are many hospital schemes in the pipeline competing for limited resources, but the conditions for children at Queen's Park hospital are scandalous. They would not be tolerated for a moment in any of our major cities and they should not be tolerated for the people of Blackburn, Hyndburn, Rossendale and the Ribble valley. The staff achieve astonishingly good results in conditions in which no one should expect them to work.
I hope to hear from the Minister in more concrete terms than I have obtained so far that decisions will be made to ensure that the schemes go ahead. I also hope to learn more

about the reasons why the schemes have been so seriously delayed, as no satisfactory explanation has ever been given. There is the strongest suspicion that it is not just a matter of limited resources, but that technical and administrative delays have contributed to the slippage.
If the scheme was due to go ahead in March this year, as the chairman of the regional health authority said in his letter of December 1981, why was the approval in principle submission not put in to the Department until 23 March this year, and why has the third section of that submission—the preferred option submission—still not been made? If the technical delays have been sorted out, as I have been assured, why did the chairman of the capital programme panel, councillor Mrs. Patricia Case, tell the Lancashire Evening Telegraph last week that, even if the money was available, the scheme could not go ahead before February next year?
I hope that the Minister will also throw some light on the continuing rumours that the dealys are due to design difficulties, due to a sloping site, and tell us why those difficulties have only now arisen when it has been known for many years that the site has slope characteristics? Why were those problems not sorted out in all the years of preparation?
Decent hospitals for our sick children are the least that we expect and demand from a civilised and relatively wealthy society, such as ours. Facilities for the care of sick children in the Blackburn and Hyndburn area are neither satisfactory nor adequate.
I know that the Minister will treat our worry seriously, and I hope to hear of Government action to match that worry.

The Under-Secretary of State for Health and Social Security (Mr. John Patten): The hon. Member for Blackburn (Mr. Straw) has pursued this issue with vigour since he was first returned in 1979. I am glad that he has had the opportunity to do so again today. I am also glad to see my hon. Friend the Member for Hyndburn (Mr. Hargreaves) here. I congratulate him on his election victory. He is taking a close interest in the affairs of his constituency and the related problems of the Victoria hospital in Accrington. No doubt I shall hear from him about that hospital by letter or in person. As he is nodding assent, I see that he will not refuse that invitation.
Nobody questions the need for development at Queen's Park hospital, Blackburn. I do not dissent from the hon. Gentleman's succinct resume of conditions there. If we were in a court of law rather than the high court of Parliament, the hon. Gentleman would want to introduce as evidence the large photograph album of views of the hospital that he was kind enough to send me recently to demonstrate conditions there. I have not had a chance to visit it, as did the then Minister of Health in 1980, but I know from my inquiries that the picture the hon. Gentleman has given is accurate.
The issue is not about the need for development but about its timing. I have had detailed inquiries made into the history of the development. In the short time that is available, I hope to answer many if not all of the questions that the hon. Gentleman has asked. If I fail to answer any of them in detail, no doubt he will remind me of them afterwards and I shall write to him.
In the 1979 strategic plan, which is an important document, the North-Western regional health authority


reported that the first phase of development of about 100 beds, including a paediatric unit, was being designed. That phase was provisionally planned to open in June 1984. The mental illness unit and the maternity unit were provisionally programmed to open during 1988. Since then, all four phases have, as the hon. Gentleman reminded us, slipped in the capital programme from year to year. I must report that the first phase could not start before April 1985. I regret that I cannot at the moment give a categoric assurance about when they are likely to start —I can only give the earliest conceivable dates.
There are two elements to what I acknowledge is a most unsatisfactory position. The first is the delay in completing the design and the second is the uncertainty about the programming of the phases. The hon. Gentleman highlighted that in his characteristically lucid speech.
I am advised that three factors have contributed to the delay in completing the design of the relatively modest phases. They are rather modest, each consisting of a little more than 100 beds and the associated services. That is not enormous by NHS standards today. The design is a variant of a new regional standard design and has run into several developmental problems that are typical of any prototype. I hope that the hon. Gentleman understands that, inevitably, there are teething problems with new designs.
New and more rigorous guidance on building and fire regulations was issued while the design work was in progress, and some revisions were needed to achieve new standards. I hope that the hon. Gentleman will not dissent from the statement that the new regulations are needed for the hospital. There may be a lesson for all district health authorities in the fact that this district health authority asked for some modification of the content of phase 1 of the scheme at a relatively late stage, which caused many problems and needed further redesigning. The delay was caused by a design problem, compounded by three separate, but interrelated, factors.
However, to come up to date, I am glad to report that the design stage of phase 1 is complete. The regional health authority expects to be able to seek the necessary approval from my right hon. Friend the Secretary of State soon, and informal discussions on a draft approval in-principle submission have already taken place between my officials and regional staff. No major problems have been identified. Provided that no unexpected problems arise —they have arisen in the past with this design—there is no reason why the region's proposals for the first two phases at Queen's Park should not be approved within 12 weeks of the Department receiving the submission. I shall take a hand in ensuring that the Department deals with the submission as quickly as possible.
I must also mention the programming of the first phase, and of any subsequent phases. For several years the North-Western regional health authority has had a capital programme considerably in excess of what it could realistically expect to undertake. At the review meeting last autumn, we set the regional health authority the task of recasting its capital programme on reasonable assumptions about future resources. I shall return to the

division of the cake, and how much money is available to the region in capital terms, in a moment. However, I understand that the work is well advanced, and we hope that the regional health authority can announce its revised programme later this month. At this stage, I cannot say what priority the regional health authority will afford to the various phases of the Queen's Park development. That is a matter for the authority, as the hon. Gentleman knows. However, overall the region's programme last year was over-committed by nearly one quarter, and many schemes will have to be delayed. In revising the programme for the current financial year, half of the 66 schemes originally planned to start this year have been delayed, including the phase 1 scheme. However, I should be surprised if the new paediatric unit at Queen's Park did not figure quite near the top of the region's priorities for next year. In any event, I shall ensure that the hon. Gentleman is advised immediately the regional health authority goes firm on its programme.
The hon. Gentleman hinted, with great delicacy, that inadequate resources might have contributed to the delays on the schemes. Nationally, the capital programme has increased by 17 per cent. in real terms during the past five years, and only last week we announced that it will continue at roughly the present high level for the next decade. It is indisputable that the North-Western regional health authority's capital allocation has been the largest in the country. Its allocation for the next period will be substantial and in line with the planning assumptions notified to the regional health authority by the Labour Government in 1978. So we have clear guidelines laid down by a previous Administration — in this region, with successive Conservative Administrations—matching planning assumptions not with promises but with cash.
The regional health authority has perhaps been slow in recent years to recognise the unreality of the assumptions on which its capital programme was based. As a consequence, many people in the region—not just in Blackburn but in other areas, such as that represented by my hon. Friend the Member for Hyndburn — will, understandably, feel let down as hospital schemes announced with provisional completion dates are delayed.
There is much to learn from that experience, not only in the north-western region but in the other 13 authorities throughout the country. I believe that under the new regional health authority chairman, Sir John Page, this lesson will be well taken and that the new capital programme, when finally announced, will be totally realistic in its approach.
Words from me will not mollify the hon. Gentleman and his constituents. Actions speak louder than words and I expect that over the next year or so, under the leadership that Sir John is giving to the regional health authority, the hon. Gentleman's confidence and that of his constituents, and of others in the north-western region, in the management of the National Health Service will be increased.
Question put and agreed to.
Adjourned accordingly at six minutes past Twelve o'clock.